Preamble

The House met at Half-past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

TEIGNMOUTH AND SHALDON BRIDGE BILL

As amended, considered; to be read the Third time.

CLYDE NAVIGATION (SUPERANNUATION) ORDER CONFIRMATION BILL

Considered; to be read the Third time Tomorrow.

Oral Answers to Questions — ROYAL NAVY

Aviation Squadrons

Mr. J. Langford-Holt: asked the Parliamentary Secretary to the Admiralty how many front-line Naval aviation squadrons are in existence today.

The Parliamentary and Financial Secretary to the Admiralty (Mr. John Dugdale): It would not be in the public interest to disclose this information.

Mr. Langford-Holt: Is the hon. Gentle-man aware that this information is given in the Navy List which is available to all Members of this House, and is that information to continue to be given when the Navy List is again published?

Mr. Dugdale: No, Sir. It will not be given publicly but only for information of Members of this House.

Mr. Langford-Holt: Will this information be continued to be published in the Navy List when the Navy List is published?

Mr. Dugdale: No, Sir. It cannot be in these circumstances.

R.N.V.R. (Strength)

Mr. Langford-Holt: asked the Parliamentary Secretary to the Admiralty

how many of the 10,000 volunteers required for the Royal Naval Volunteer Reserve have so far volunteered.

Mr. Dugdale: As my noble Friend said in his Statement Explanatory of the Navy Estimates (Command 7632), financial provision has been made for an increase in the strength of the R.N.V.R. to 7,000; not 10,000 as suggested by the hon. Member. The total number enrolled to 28th February last, the latest date for which figures are available, is 3,670, and it is expected that the present target will be reached by the end of the financial year.

Commander Noble: Can the hon. Gentleman say how the figures are made up with regard to officers and men?

Mr. Dugdale: Yes, Sir. It is anticipated that the full establishment will be 1,830 officers and a maximum strength of 5,000 ratings.

Commander Noble: Can the hon. Gentleman state the numbers of officers and men who have joined so far?

Mr. Dugdale: Not off-hand; I am not quite certain.

Cruisers

Mr. Donner: asked the Parliamentary Secretary to the Admiralty the minimum number of cruisers now regarded by the Board of Admiralty as the indispensable minimum for the safety of the United Kingdom and of the Empire for the protection of our trade routes and for the command of the sea in 1949 and during the next few years.

Mr. Dugdale: No, Sir, I regret that it would not be in the public interest to give information of this kind.

Mr. Donner: Is the Parliamentary Secretary aware that in bygone years the minimum number of cruisers considered necessary has always been published, and in view of our extensive imperial and national commitments can he justify the position he has now adopted?

Mr. Dugdale: Yes, Sir. As has been stated on a number of occasions, other countries do not give us information as to their strength, and we do not think it advisable that we should give information as to our strength.

Mr. Donner: Is the hon. Gentleman aware that it is not possible to hide a major ship?

Mr. Dugdale: It may not be possible to hide a major ship but we can hide the target as to major ships.

Vice-Admiral Taylor: Will the hon. Gentleman give an assurance to the House that, in view of the small number of cruisers at present in commission, as crews become available, more cruisers will be put into commission in order to bring up our cruiser strength?

Mr. Dugdale: That is another question.

Mr. Emrys Hughes: Can the hon. Gentleman give some indication whether there will be more cruisers or fewer cruisers as a result of the Atlantic Pact?

Aircraft Carriers

Captain Marsden: asked the Parliamentary Secretary to the Admiralty, when it is intended to proceed with the construction of the carriers, "Powerful," "Leviathan" and "Hercules."

Mr. Dugdale: I would refer the hon. and gallant Member to the reply given by my hon. Friend the Civil Lord to the hon. Member for Hereford (Mr. J. P. L. Thomas) during the Debate on the Navy Estimates, to which I have nothing to add.

Captain Marsden: Is it the opinion of the Admiralty that the present strength of our Fleet is so strong that we can afford to do without these ships which were started and the construction of which has now been stopped?

Mr. Dugdale: It is not a question of that at all. It is that we want to be absolutely certain that we have the latest equipment in them, and we do not want to get them ready until we have the latest and best equipment for them.

Prize Money and Decorations

Mr. Chetwynd: asked the Parliamentary Secretary to the Admiralty the arrangements for the distribution of prize money and the issue of medals and campaign stars for the Navy.

Mr. Dugdale: It is expected that the necessary forms will have been printed and that the Admiralty will be ready to deal with claims within the next two

months. An announcement will then be made in the Press and through the British Broadcasting Company inviting applications from ex-Service officers and men, and from the next-of-kin of those who died, on a special form which will be made available at post offices. Applications from serving officers and men will be made through official channels. Distribution of prize money and medals and campaign stars will begin shortly after receipt of the first applicaations.

Mr. Chetwynd: Can my hon. Friend say whether or not prize money is subject to Income Tax?

Mr. Dugdale: No, Sir, it is not.

Electricity Mains, Cornwall

Commander Agnew: asked the Parliamentary Secretary to the Admiralty whether his Department is now prepared to give financial assistance to the South-Western Electricity Board in connection with the requirement that the mains to the villages of Perranzabuloe, Penhallow, Rose and Rosehill must be brought underground.

The Civil Lord of the Admiralty (Mr. Walter Edwards): No, Sir. The circumstances of this case are by no means unique and the Admiralty's attitude con-forms with established usage. I am arranging for the South-Western Electricity Board to be informed officially of the Admiralty's views.

Commander Agnew: Is not the hon. Gentleman aware that, although the Admiralty are legally on sound ground in not considering themselves liable to make any payment, grave hardship will fall on the village people of these districts solely as a result of the Admiralty requirement that the mains should be brought underground; and will he therefore consider making an ex gratia payment?

Mr. Edwards: I do not consider that hardship will be caused as a result of the Admiralty's action. This matter is left to the South-Western Electricity Board, and it is their financial responsibility.

Mr. R. S. Hudson: Does the hon. Gentleman realise that this action and this decision make nonsense of the pledge given by the Minister of Fuel and


Power during the passage of the Electricity Act, that steps would be taken to provide electricity in rural areas?

Mr. Edwards: That is another question.

Officer's Death (Notification)

Mr. Keeling: asked the Parliamentary Secretary to the Admiralty whether he has considered a case, details of which have been sent him, in which the relatives of a naval officer read of his death on duty in a newspaper before they received the Admiralty telegram; and whether he will announce any new arrangement designed to prevent such an occurrence in future.

Mr. W. Edwards: In the case referred to a telegram was sent to the next-of-kin at 8.30 a.m. on 4th November. It is regretted, however, that, owing to the absence all day of both parents, the name of the officer concerned was published in the evening papers before the parents' arrival home and their receipt of the telegram. For the purpose of preventing a similar occurrence, it has been decided that if the British Broadcasting Corporation or the Press ask the Admiralty for details of casualties during the day on which the next-of-kin has been informed, they will be asked to withhold publication until the following day. Although the Admiralty cannot prevent the names of casualties being obtained by reporters on the spot and published without reference to the Admiralty or local naval authorities, we hope that the Press will co-operate in the interests of the next-of-kin by adhering to the arrangements we have just described.

Mr. Keeling: For this blood extracted at last out of a stone, may I express my acknowledgement and the hope that the other Services will follow the Admiralty lead?

H.M.S. "Ajax"

Mr. J. P. L. Thomas: asked the Parliamentary Secretary to the Admiralty if he will make a statement with regard to the future of H.M.S. "Ajax."

Mr. Blackburn: asked the Parliamentary Secretary to the Admiralty whether any decision has yet been taken with regard to the projected sale of the "Ajax" to Chile.

Mr. Dugdale: His Majesty's Government have given this matter the most careful consideration. They are conscious of the very cordial relations which have existed between the British and Chilean Navies over a long period. Nevertheless, they have decided that this ship, which has played such a historic role in British Naval history, should not be sold to any foreign Power. As, however, the Navy has no further use for her she will, of course, have to be scrapped.

Mr. Thomas: Is the Parliamentary Secretary aware how gratified the country will be at the decision that this historic ship should not be sold to a country at the moment in possession of British territory?

Vice-Admiral Taylor: Instead of scrapping this ship, which rendered such illustrious service during the war, would it not be possible to turn her over to one of the Dominions, who might make very good use of her, so that she would still fly an Empire flag?

Mr. Dugdale: That is another Question, which should obviously be addressed to my right hon. Friend the Secretary of State for Commonwealth Relations.

Compassionate Leave

Mr. A. Edward Davies: asked the Parliamentary Secretary to the Admiralty whether he will now make any further statement on the refusal to grant compassionate leave to P.O. /X 127269 Marine Robert Mosedale.

Mr. Dugdale: As I said in my reply on 23rd March, my noble Friend is inquiring into this case and I will write to my hon. Friend as soon as possible.

Mr. Davies: Can my hon. Friend tell us when we may expect a reply, as the matter has been under consideration for almost a couple of months now?

Mr. Dugdale: No, Sir, although I do realise that it is desirable that a reply should be given as soon as possible, and I will do my best to see that a reply is given.

Mr. Yates: Is it customary for the Admiralty to grant compassionate leave in those cases where the presence of the rating would assist the recovery of the parent?

Mr. Dugdale: It depends on the individual circumstances. The general rule is that it is allowed in cases where there is no other son or daughter present.

Oral Answers to Questions — TELEPHONE SERVICE

Accounts (Deposits)

Sir Wavell Wakefield: asked the Postmaster-General the amount of money held by his Department on deposit against telephone accounts at the latest convenient date.

The Postmaster-General (Mr. Wilfred Paling): The amount of deposits by telephone subscribers held by the Post Office on 31st December, 1948, was £751,000.

Sir W. Wakefield: In view of the substantial amount held on deposit, will the Postmaster-General consider reducing the amount asked for from telephone subscribers?

Mr. Paling: We do not ask for the £1 deposit that we used to ask for before 1934. This amount has been diminishing every year, and is now very much less than it ever was.

Altrincham Exchange

Mr. Erroll: asked the Postmaster-General what plans he has for the modernisation of the Altrincham telephone exchange; and when these plans will be executed.

Mr. Wilfred Paling: It is planned to convert the Altrincham telephone exchange to automatic working as soon as the necessary building can be erected and the equipment installed. This is an extensive job which is unlikely to he completed before the end of 1954.

Mr. Erroll: Is there no hope of completing the work earlier, in view of the congestion on this exchange despite efficient staffing?

Mr. Paling: I do not think that there is any hope of completing this particular job, but there is room to put on a number of other lines with an extension of the present exchange.

Kiosks, Rural Areas

Colonel Ropner: asked the Postmaster-General how many public telephones have been installed in country

areas in the West Riding of Yorkshire during the past 12 months; how many villages of more than 500 inhabitants, or a similar convenient number, in the West Riding are still without public telephones; and what plans are in hand for the installation of further public telephones in country districts in the West Riding.

Mr. Wilfred Paling: Fifty-three telephone kiosks were installed in 1948 in rural areas of the West Riding of Yorkshire, and plans are in hand for the provision of a further 60. The number of villages of more than 500 inhabitants without a telephone kiosk is not readily available.

Colonel Ropner: Is not the Postmaster-General aware that there is a great demand for the installation of public telephones; and can he indicate the chief reasons that make progress so slow?

Mr. Paling: I think that the progress in providing telephone kiosks in the last two years has been quicker than it ever was before.

Mr. Goronwy Roberts: asked the Postmaster-General if he is now able to give further details of the quota system of providing public telephone kiosks in rural areas as announced by him on 30th March.

Mr. Wilfred Paling: Under the new quota system the Post Office will determine each year the total number of rural kiosks which it can provide, and, in cooperation with the Rural Districts Councils Association, will allocate this number between counties. The location of the individual kiosks will be determined in the light of the recommendations of the rural local authorities in each county. Final details of the scheme are still under discussion.

Colonel Dower: As many of the rural areas in the most remote parts of Cumberland have been waiting three or four years since applying for these public telephone kiosks, cannot the right hon. Gentleman do something on the quota system to hasten the remedying of the shortage of equipment or manpower?

Mr. Paling: In spite of difficulties we have allocated to the building of telephone kiosks in remote areas a far larger proportion than ever before.

Colonel Dower: There has been a four years' wait.

Morecambe

Sir Ian Fraser: asked the Postmaster-General how many persons were on the waiting list for a telephone in Morecambe on 31st March, 1946; and how many arc on the waiting list now.

Mr. Wilfred Paling: There were 605 outstanding applications for telephone service in Morecambe on 31st March, 1946, and 572 on 31st March, 1949. Over 900 new subscribers have been connected during this period.

Sir I. Fraser: When will the right hon. Gentleman catch up on this considerable waiting list?

Mr. Paling: Well, we are doing our best, but it is largely a question of manpower, and in some cases of capital equipment.

Sir W. Wakefield: Can the right hon. Gentleman say how long a potential subscriber has to wait before he is connected?

Mr. Paling: No, Sir.

Women Clerks, Sheffield

Mr. Burden: asked the Postmaster-General if he is aware that temporary women clerks over 33 years of age employed in the Post Office Telephone Manager's office, Sheffield, have been warned that they are redundant and will be dismissed, their places being filled by recruitment; that temporary women clerks over 33 are to be denied the opportunity to pass a qualifying test for appointment to the establishment; and if he will make a statement on the matter.

Mr. Wilfred Paling: The replacement of temporary women clerks by established staff in the telephone manager's office at Sheffield is in accord with an agreement of the National Whitley Council which applies to the Civil Service as a whole. The upper age limit for appointment as clerical assistant is 33, but a proportion of the temporary clerks older than 33 have been given establishment as clerical officers, and a further scheme of establishment is being carried out. It has also been possible for temporary women clerks older than 33, with a knowledge of machine operating, to secure establishment as machine assistants.

Mr. Godfrey Nicholson: Can the right hon. Gentleman say whether discrimination is exercised either against or in favour of married women in these cases?

Mr. Paling: I am not quite sure about that. Perhaps the hon. Gentleman will put down that question.

Oral Answers to Questions — POST OFFICE

New Building, Newport

Mr. Peter Freeman: asked the Postmaster-General what arrangements he proposes to make to ensure that all the facilities at Newport Post Office will be continued and maintained during the building operations for the new offices on the same site.

Mr. Wilfred Paling: Building operations will be confined to the site adjoining the present head post office, and all public facilities will be fully maintained while the building work is going on.

Stamp Issues, Argentina

Sir John Mellor: asked the Postmaster-General if his attention has been drawn to postage stamps issued by the Argentine Government and designed with maps to emphasise Argentine pretensions to the Falkland Islands and Dependencies; and whether he will decline to accept for transmission by British postal services covers bearing such stamps as offensive propaganda.

Mr. Wilfred Paling: The answer to the first part of the Question is "Yes, Sir." As regards the second part, under the provisions of the Universal Postal Convention, the criterion for the prepayment of postage in the international postal service is that the postage stamps used must be valid in the country of origin; and it would neither be consistent with those provisions nor in the interests of the addressees to do as the hon. Member suggests.

Sir J. Mellor: Is the right hon. Gentleman aware that his indifference will be deeply resented by our fellow subjects in the Falkland Islands?

Mr. Paling: I do not think there is any indifference at all. If I did what the hon. Member wishes I should have a lot of people in this country complaining.

Post-Mark, Lancaster and Morecambe

Sir I. Fraser: asked the Postmaster-General if, in view of the separation of Morecambe from Lancaster under the Representation of the People Act, he will change the post-mark "Lancaster and Morecambe" to "Morecambe and Heysham."

Mr. Wilfred Paling: No, Sir. There would be no public or postal advantage in doing as the hon. Member suggests.

Sir I. Fraser: Is the right hon. Gentleman aware that there would be very great pleasure in Morecambe and Heysham?

Office Business

Mr. Wilson Harris: asked the Postmaster-General what business is transacted at post offices apart from postal, telegraph, telephone and savings bank services.

Mr. Wilfred Paling: Apart from the services named by the hon. Member, other business transacted at Post Offices includes: (1) Issue and payment of money orders and postal orders, (2) Payment of pension and allowance orders and of postal drafts issued by Government Departments, (3) Sale of insurance, entertainments duty, and certain fiscal stamps, (4) Issue of broadcast, television, motor vehicle, local taxation and private brewer licences, (5) Issue of standard petrol ration books, (6) Issue of tobacco duty relief token books and application forms, (7) Acceptance of documents for stamping for transmission to the Inland Revenue, (8) Issue of forms and leaflets relative to these and other Government services, (9) Maintenance of lists of doctors and chemists participating in the National Health scheme.

Mr. Wilson Harris: I am obliged to the right hon. Gentleman for that answer, but would he not agree, in view of the length of that list of extras, that his salary ought to be raised?

Mr. W. R. Williams: Will my right hon. Friend recommend the Post Office Guide to the hon. Member from which he can get all the information he wants?

Oral Answers to Questions — ROYAL AIR FORCE

Married Quarters

Mr. Bossom: asked the Secretary of State for Air how many of the existing

married quarters which were intended for junior Royal Air Force officers at the various Royal Air Force stations throughout Great Britain are now occupied by senior officers to the exclusion of those for whom they were intended.

The Secretary of State for Air (Mr. Arthur Henderson): Apart from a few exceptions, for example where station commanders are required for service reasons to occupy official residences, married quarters for R.A.F. officers are allotted in accordance with a points scheme which has no relation to rank and is common to both junior and senior officers. Under this scheme it is the case that some quarters originally built for junior officers are now being occupied by officers of more senior rank, but the actual number is not available.

Mr. Bossom: Does not the right hon. and learned Gentleman realise that it is awfully discouraging to junior officers, who have always regarded these houses as being for their own use, to see them taken by senior officers? Cannot he change this practice as soon as possible?

Mr. Henderson: That is what we are seeking to do by building more married quarters.

Air-Commodore Harvey: Is the right hon. and learned Gentleman aware that when an officer occupies a smaller house than that to which he is entitled he has to pay the higher rent? Will he see that the correct rent is paid in future?

Mr. Henderson: I should like to look into that matter.

Mr. Bossom: asked the Secretary of State for Air what is the number of married quarters for senior and junior officers which are now needed at Royal Air Force stations throughout Great Britain.

Mr. A. Henderson: We estimate that over 4,000 new quarters are required, of which the majority will be needed for officers of the rank of squadron-leader and above.

Mr. Bossom: Does not the right hon. and learned Gentleman realise the great importance of making this accommodation available, and will he give this first priority so that officers get the accommodation they ought to have?

Mr. Henderson: The hon. Member has a Question down on that point.

Mr. John E. Haire: Can my right hon. and learned Friend say whether many officers have resigned their commissions because of the difficulty of obtaining accommodation?

Mr. Henderson: Not to my knowledge.

Mr. Bossom: asked the Secretary of State for Air why pre-fabricated houses appropriately painted are not being used for married quarters on Royal Air Force stations throughout Great Britain.

Mr. A. Henderson: In view of the limited resources in finance, labour and materials available to my Department each year since the war for the construction of new married quarters, and the fact that a considerable amount of surplus hutting has been available at R.A.F. stations for conversion to married quarters at substantially less than the cost of prefabricated houses, the policy of my Department has been to concentrate on the construction of permanent quarters and the conversion of hutting. We have converted 1,200 huts to temporary married quarters since the end of the war, and will complete the conversion of a further 1,100 this year. As announced by my right hon. Friend the Minister of Defence, urgent consideration is being given by the Government to the possibilities of expanding the present building programme for the Services, and in this connection the possibility of using prefabricated houses is being examined.

Mr. Bossom: I sincerely hope that the right hon. and learned Gentleman will give very serious consideration to this, because all the jigs and tools are there and he could build these houses much quicker than he could build houses of any other type?

Mr. John Paton: Will my right hon. and learned Friend inform the House what is the appropriate paint for married quarters?

Demobilisation (Release Books)

Mr. John Lewis: asked the Secretary of State for Air if he is aware that a number of serving men in the Royal Air Force were sent back to their units in England from Enniskillen. County

Fermanagh, for demobilisation on the 16th March, 1949, and because it was found that they had blue demobilisation books instead of brown demobilisation books they have all been sent back to Enniskillen; and if he will make a statement.

Mr. A. Henderson: Four airmen who reported for demobilisation at a personnel dispersal centre in Lancashire with the wrong kind of release book filled in were sent back to their unit in Northern Ireland for correct documentation. I regret that this action was taken and instructions have been issued that should prevent any similar occurrence in future.

Lieut.-Colonel Sir Thomas Moore: Is not the right hon. and learned Gentleman aware that Enniskillen is a very nice place to which to be sent back? I was at school there.

Mr. McGovern: The hon. and gallant Member does not want to go back?

Electric Cables, Membury Airfield

Mr. Hurd: asked the Secretary of State for Air if he is aware that the people of Woodland St. Mary and Lambourn Woodlands, in Berkshire, are being denied a public supply of electricity by reason of his Department's requirement that the lines in the proximity of Membury airfield must be laid underground, which adds £3,650 to the cost of the proposed supply scheme; and if he will make some payment to meet the extra cost of laying the cable underground.

Mr. A. Henderson: No, Sir. I am not aware that the residents of the two villages referred to have been denied a public supply of electricity by reason of any action on the part of my Department. Where, as in this case an R.A.F. airfield is in existence prior to the laying of electric cables close to it by an electricity authority, it has always been the practice that the extra cost of laying such cables underground should be borne by the electricity authority concerned. In these circumstances, the last part of the Question does not arise.

Mr. Hurd: Will the right hon. and learned Gentleman consult with the Minister of Fuel and Power? Does he not agree that it is outrageous that these villagers who want a public supply of


electricity should be charged expenses which properly are his concern and have nothing to do with them or the electricity board?

Mr. Henderson: I certainly agree that every village should be provided with electricity, but the question of paying for it is a different matter, at least when my Department is asked to pay for it.

Mr. R. S. Hudson: Does the right hon. and learned Gentleman realise that this practice by the Service Ministers—it was confirmed by the Admiralty today—is preventing residents in these rural constituencies getting a supply at anything like a reasonable cost, and as the Government promised that they would provide the cost themselves is this not another case of a broken pledge?

Mr. Henderson: That is a question which should be put down to the Minister of Fuel and Power.

Mr. Hudson: I understood that this Question was put down to the Ministry of Fuel and Power, as was the Question to the Admiralty, and that they were transferred to the Service Departments?

Mr. Henderson: I am not aware of that.

Oral Answers to Questions — CIVIL AVIATION

Airports, London

Mr. Geoffrey Cooper: asked the Parliamentary Secretary to the Ministry of Civil Aviation if he will review the question of future London airport requirements as a matter of urgency and if he will consider setting up an airport committee to consider the whole question.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): This question is under continuous review within my Department, and no purpose would therefore be served by setting up an airport committee on the lines proposed.

Mr. Cooper: Will not my hon. Friend agree that so far the provision of aerodromes for London has been considered piecemeal and no overall policy has been decided? Since the Pakenham Committee was set up to consider the question of flying-boat bases, would it not be appropriate now to have a similar committee

set up to consider landing places especially in the London area?

Mr. Lindgren: The policy for aerodromes is settled, and I announced it on 1st March.

Colonel Haughton: Will the Parliamentary Secretary bear in mind that it may be necessary to plan for two entirely different types of airports, the one dealing with the helicopter type of aeroplane, as near as possible to the centre of our cities, and the other dealing with the 100-ton type of aircraft? Does not he agree that, in planning, these two factors must be taken into consideration?

Mr. Lindgren: Most certainly.

South-West Pacific Conference

Mr. Rankin: asked the Parliamentary Secretary to the Ministry of Civil Aviation for what reasons he is not making the report on the South-West Pacific Conference available to Members.

Mr. Lindgren: This document was a report to my noble Friend made in conformity with usual practice by the senior officer of the Ministry accompanying the delegation. Reports of this kind are confidential, and it would not be in the public interest to make them generally available.

Oral Answers to Questions — SPAIN

British Consulate, Saragossa (Closing)

Mr. George Jeger: asked the Secretary of State for Foreign Affairs if he will make a statement on the closing of the British Consulate at Saragossa.

The Under-Secretary of State for Foreign Affairs (Mr. Mayhew): On 23rd November last the Spanish Ministry of Foreign Affairs requested the withdrawal of Senor Gil our Vice-Consul at Saragossa. Upon instructions His Majesty's Chargé ďAffaires asked the Spanish Government to explain their action: he was informed that they did not consider Senor Gil a suitable person to be acting as Vice-Consul for a foreign Government, but that since he was a Spanish citizen they felt under no obligation to give further details. This attitude of the Spanish authorities unfortunately left us


no alternative than to withdraw Senor Gil. This was done on 16th December; and the Vice-Consulate has been closed.

British Consular Official, Las Palmas (Transfer)

Mr. Jeger: asked the Secretary of State for Foreign Affairs why Mr. Thomas Bates, an official of the British Consulate at Las Palmas, has been ordered by the Spanish Government to leave Spain.

Mr. Mayhew: Mr. Thomas Bates, who was British Consul at Las Palmas, has been transferred from this post at the request of the Spanish Government, who alleged that he had indulged in "hostile activities." His Majesty's Government do not admit the justification for this request. Nevertheless, it was clear that, having regard to the attitude of the Spanish authorities, Mr. Bates would no longer have been able to carry out satisfactorily his duties at a Spanish post. He was, therefore, withdrawn under protest.

Mr. Jeger: Has another British citizen been sent to that post in substitution for Mr. Bates?

Mr. Mayhew: Yes, Sir.

Mr. William Teeling: Was Mr. Bates in the Consular Service in Spain during the war?

Mr. Mayhew: Yes, Sir.

U.N.O. Resolution

Mr. Wilson Harris: asked the Secretary of State for Foreign Affairs whether it is the policy of His Majesty's Government to oppose the association of Spain with any of the technical organisations of the United Nations.

Mr. Mayhew: The present Spanish Government is excluded from the specialised agencies of the United Nations by a recommendation of the General Assembly of 12th December, 1946. So long as this recommendation remains in force, His Majesty's Government will abide by it.

Mr. Wilson Harris: Have the Government an intention of moving that this resolution be rescinded?

Mr. Mayhew: We shall not move that the resolution be rescinded.

Mr. Warbey: Will my hon. Friend give an assurance that the Government will not support any motion to rescind this resolution?

Mr. Mayhew: It is not our present intention to support a move to rescind the resolution. At the same time, a case can be made out against the exclusion of Spain from international conferences of a technical character, and I cannot commit the Government to opposing any such move, if it is made.

Oral Answers to Questions — GERMAN PRISONERS (U.K.—U.S.S.R. NOTES)

Major Tufton Beamish: asked the Secretary of State for Foreign Affairs what reply has been received from the Soviet Government to the suggestion made by His Majesty's Government on 15th March that an international body should be invited freely to carry out an inspection of the conditions under which German ex-prisoners of war are living in the United Kingdom, the Middle East and the Soviet Union.

Mr. Mayhew: No reply has yet been received from the Soviet Government to His Majesty's Government's Note of 15th March about the retention of German prisoners of war in the Soviet Union, in which this suggestion was contained.

Oral Answers to Questions — TRANSJORDAN (BRITISH FORCES)

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for Foreign Affairs what reply he has given to the representations from the Israeli Government about the presence of His Majesty's Forces in Transjordan.

Mr. Mayhew: The text of the reply given to my hon. Friend the Member for West Leicester (Mr. Janner) on this subjest on 28th March has been communicated both to the Acting Israeli Representative in London and to the Israeli Representative at the United Nations, in reply to their representations.

Sir T. Moore: The hon. Gentleman has not read my Question. I asked what reply he had given. No reply has been given to me.

Mr. Mayhew: The hon. and gallant Member asked what reply has been given to the representations from the Israeli Government. The reply we gave was the text of the reply given to my hon. Friend the Member for West Leicester.

Sir T. Moore: I have not got that reply. I want a reply.

Mr. Piratin: asked the Secretary of State for Foreign Affairs on what date the Transjordan Government made the request that British troops shall patrol the frontier of Transjordan from Aqaba to the Dead Sea; on what date he replied; and what the reply was.

Mr. Mayhew: The request from the Transjordan Government that the British Force at Aqaba should send patrols along the Western frontier of Transjordan from Aqaba to Gharandal was transmitted by His Majesty's Legation on 17th March. Since an armistice between Transjordan and Israel has been concluded the question no longer arises, and no reply has been given.

Mr. Warbey: asked the Secretary of State for Foreign Affairs to what extent the size of the British Forces in Aqaba will be reduced in consequence of the conclusion of Israel-Transjordan armistice agreement.

Mr. Mayhew: The full text of the armistice agreement is not yet available. I am not in a position to make any statement.

Viscount Hinchingbrooke: As Aqaba is now assuming considerable strategic importance will the Government negotiate with the Government of Transjordania, with a view to establishing it as a permanent base?

Mr. Mayhew: That is quite another question.

Mr. Piratin: In view of the agreement reached between Israel and Transjordan is it now the intention of His Majesty's Government to withdraw our Forces from Aqaba?

Mr. Mayhew: We have not yet seen the text of the agreement.

Oral Answers to Questions — ADEN DISTURBANCES (COMPENSATION)

Mr. Piratin: asked the Secretary of State for the Colonies why, arising from the report of the commission of inquiry into the Aden riots, the Government of Aden have not accepted liability to pay compensation.

Mr. Rees-Williams: The Commissioner's report did not, in the opinion of my right hon. Friend, disclose a case for compensation on either legal or moral grounds. He has approved the Governor's proposal to put into effect a scheme of ex gratia assistance for rehabilitation purposes.

Mr. Piratin: In view of the fact that that report shows that there was a certain negligence on the part of at least a section of the authorities in not preventing the riots which took place a year ago, as a result of which about 100 people were killed and much property was damaged, is not some responsibility vested in the authorities? Will the hon. Gentleman review his decision?

Mr. Rees-Williams: The report showed nothing of the kind. The Commissioner found that the local Government had no grounds for apprehending the outbreak which occurred.

Mr. Sydney Silverman: Does it not also state in the report that a great many of the deaths and a good deal of the damage which was done were due to mistakes made by British officers in charge of the troops? Will my hon. Friend make the report available to Members, so that they can make up their own minds on the justice and equity of this matter?

Mr. Rees-Williams: I do not accept the first part of the hon. Gentleman's supplementary question.

Oral Answers to Questions — COLONIAL EMPIRE

Public Works (Model Plans)

Mr. Thomas Reid: asked the Secretary of State for the Colonies what assistance is given by Colonial Public Works departments in the form of free plans and specifications for model small houses, shops, markets, schools and hospitals to


those who need them, with a view to preventing elementary mistakes in buildings by amateurs.

Mr. Rees-Williams: Several Colonial Public Works departments or Social Welfare departments publish reports and manuals containing model plans (usually of houses).

Food Production

Mr. Lipson: asked the Secretary of State for the Colonies whether the policy of the Colonial Development Corporation is to promote food production through private enterprise or by State owned model and experimental farms.

Mr. Rees-Williams: I would invite the hon. Member to apply to the Corporation for this information.

Mr. Lipson: Does that mean that the hon. Gentleman has not got that information? Ought it not to be available to the House?

Mr. Rees-Williams: It means that that information is available at the Corporation and not at my Ministry.

Mr. Ivor Thomas: Surely this is a question of Ministerial responsibility?

Oral Answers to Questions — ADVISORY COUNCIL FOR WALES

Sir Henry Morris-Jones: asked the Prime Minister whether he is now able to announce the names of the chairman and members of the proposed Advisory Council for Wales.

Mr. George Thomas: asked the Prime Minister the names of the persons appointed to serve on the Advisory Council for Wales; and the proposed date and venue of the first meeting of the Council.

The Prime Minister (Mr. Attlee): The composition of the Council has not been finally settled, but I hope to be able to announce the names shortly. Arrangements for the first meeting will not, of course, be made until it has been set up.

Sir H. Morris-Jones: Will the right hon. Gentleman appoint, as chairman of this body, a person of some eminence in

Wales who has not been associated with party politics, in view of the fact that the setting up of this body has not been well received in the Principality?

The Prime Minister: The qualifications of the person to be selected as chairman will be taken into account.

Mr. Peter Freeman: Is it the intention to appoint women to the Council, as well as men?

The Prime Minister: Perhaps my hon. Friend will wait and see.

Oral Answers to Questions — B.B.C. (INQUIRY PROCEDURE)

Lieut.-Commander Clark Hutchison: asked the Lord President of the Council whether, in view of the public interest in the staffing, organisation and work of the British Broadcasting Corporation, he will now arrange for the inquiry which is to be held under the chairmanship of Sir Cyril Radcliffe to take place in public and be open to the Press.

The Lord President of the Council (Mr. Herbert Morrison): As I told my hon. Friend the Member for West Middlesbrough (Mr. Cooper) on 31st January, it is for the committee of inquiry itself to determine its procedure.

Lieut.-Commander Hutchison: Does not the right hon. Gentleman think it right, in view of the public money involved, that the public should be kept acquainted of what transpires at the inquiry?

Mr. Morrison: We are following precedent. The last committee of inquiry, before the war, met in private. All I am saying is that it is for the committee itself to determine whether it sits in public or private. I think that that will be most convenient because some of the evidence will be of such a character that the persons concerned will give better and franker evidence in private than in public.

Mr. Nicholson: Will the right hon. Gentleman indicate to the committee that, if possible, it should sit in public? There is some feeling on the matter.

Mr. Morrison: I do not think there is any public feeling about it at all. I do not think it would be right to indicate to


the committee one way or the other what it should do; it is for the committee to be master of its own procedure.

Lieut.-Commander Hutchison: Will the committee's report be made public.

Mr. Morrison: Yes, Sir, the final report will certainly be made public.

Sir I. Fraser: Does the right hon. Gentleman remember that the Crawford Committee, the first of these committees, sat in public throughout?

Mr. Morrison: I did not quite catch what the hon. Gentleman said; I am sorry.

Oral Answers to Questions — COMMON COLD (RESEARCH)

Sir Ralph Glyn: asked the Lord President of the Council whether he is now in a position to report on the progress made in the investigation of the causes that produce the common cold which have been carried out for some time by the Medical Research Council establishment at Salisbury.

Mr. H. Morrison: The researches at Salisbury, promoted by the Medical Research Council with the co-operation of the Ministry of Health, are adding steadily to knowledge of various aspects of the common cold, though the nature of the problem is such that rapid progress cannot be expected. The fact that it has been found possible to transmit the infection to human volunteers, in some 60 per cent. of cases, by means of filtered nasal washings from people with colds strongly indicates that the cause is a virus.

Oral Answers to Questions — ARMED FORCES

National Service Men (Civilian Clothing)

Mr. Chetwynd: asked the Minister of Defence what would be the annual cost of providing Service men called up since 1st January, 1947, with a civilian clothing grant of £10.

Mr. Driberg: asked the Minister of Defence, (1) what would be the approximate annual cost of a cash grant of £15, in lieu of clothing, to each National Service man on demobilisation;
(2) What would be the approximate annual cost of issuing to each National Service man on demobilisation a clothing outfit consisting of one utility suit of reasonable quality, two shirts, and one pair of shoes;
(3) How many men or women it is estimated would have to be employed full time in the administration of a scheme for issuing an outfit of clothing to National Service men on demobilisation.

Lieut.-Colonel Lipton: asked the Minister of Defence how much it would cost to provide a suit of civilian clothing to demobilised National Service men.

The Minister of Defence (Mr. A. V. Alexander): The cost during the financial year 1949–50 of providing a cash grant of £15 to each National Service man on demobilisation would be approximately £3.4 million. For a cash grant of £10 the cost would be roughly £2.3 million. The organisation originally established to issue civilian outfits under the "age and service" release scheme has been to a very large extent wound up and it is difficult to assess the overall cost to the Services in money and manpower of reestablishing an organisation adequate to issue clothing on the scale mentioned by my hon. Friend the Member for Maldon (Mr. Driberg). The actual cost of purchasing the clothing mentioned by my hon. Friend would be about £1.6 million. If a suit only were issued the cost of the clothing itself would be about £1 million.

Mr. Chetwynd: In view of the growing feeling in the country on this matter will my right hon. Friend reconsider the decision he announced last week and agree in principle to a £10 grant, after which he can argue with his Service colleagues how to save £2 million from the vast sum of £760 million already passed for the Services?

Mr. Alexander: It would be wrong to mislead the House on this matter. It has been carefully considered. The Estimates for the Fighting Services, which have been submitted and passed by the House, have already been severely pruned and reduced. The decision of the Government is that they are unable to increase those Estimates this year.

Mr. Driberg: Is not the sum of £1 million to supply a suit to each of


these men an infinitesimal amount in relation to the total defence expenditure, and has my right hon. Friend any doubt that Parliament would approve a small Supplementary Estimate for this specific purpose?

Mr. Alexander: It is a question whether the Executive Government would submit to the House an increase in the Estimates, and I have already dealt with that point. One million pounds is the bare cost of the wholesale contract for the suits alone and would not be the end of the cost.

Lieut.-Colonel Lipton: As that figure of £1 million given by my right hon. Friend represents the cheapest quotation received so far, will he in the quarter of an hour or 20 minutes still available to him ask his right hon. and learned Friend the Chancellor of the Exchequer to put the appropriate entry in the appropriate petty cash column of the Budget?

Mr. Alexander: Today, of all days, is the last one on which I should like to commit my right hon. Friend the Chancellor of the Exchequer.

Mr. McGovern: Is my right hon. Friend aware that nothing that the Government have done within recent months has merited such condemnation in the country as this mean and reprehensible action?

Mr. Alexander: That is because the people are not being properly informed of the position. The position of these men is very different indeed from that of those for whom the House provided very generous grants for clothing as a result of the age and service release scheme following war service.

Mr. Shurmer: Is the Minister aware that many of these young men have widowed mothers and when they come out of the Army they will have nothing but an ordinary Army suit in which to go to work?

Mr. Chetwynd: I beg to give notice that I shall do my best to raise this matter on the Adjournment.

Mr. Lipson: asked the Minister of Defence what facilities are provided by the Services to enable National Service men to save enough from their pay to buy civilian clothing on demobilisation; and how many have done this up to date.

Mr. Alexander: There are ample facilities to enable Service men to save and a considerable proportion of men take advantage of them. I cannot, however, say how many National Service men do so or how many have saved enough to buy clothing.

Mr. Lipson: In view of the answer which the right hon. Gentleman gave last week, I should like to ask him whether he himself has seen the budgets of any of these National Service men, many of whom give a weekly allowance to their parents, and if so, is he satisfied that they can save from their pay to buy these suits of clothes?

Mr. Alexander: We took a great number of factors into consideration when considering the matter, which we did at length and with the utmost sympathy. I have got particulars which show that a very large percentage of the Army personnel are using the Post Office Savings Bank for deposits, and I have a good many other figures to show that many soldiers are saving money.

Cadets (Uniform Allowance)

Mr. Hurd: asked the Minister of Defence if he will make the full uniform allowance of £50 on commission to those National Service men who at the time he announced the reduction to £29 had already started training as officer cadets.

Mr. Alexander: If before the new rates of allowance were announced cadets had, in good faith, ordered uniform on the old scales the former rates of allowance will be paid.

Jet Bombers (Production)

Mr. Blackburn: asked the Minister of Defence what priority has been given to the production of jet bombers.

Mr. Alexander: I would refer my hon. Friend to the statement of my right hon. Friend the Secretary of State for Air in this House on 15th March.

Mr. Blackburn: Is the Minister of Defence aware that there is considerable dissatisfaction over our slowness in getting into production with jet bombers, and is he himself satisfied that everything possible is being done to get into production at the earliest possible moment?

Mr. Alexander: I am quite satisfied about the last point. I am sure my hon. Friend knows full well how long it takes to develop a jet bomber from the actual first designing stage. That has already been debated in the House.

Oral Answers to Questions — FOOD SUPPLIES

Hostel, Shanklin (Prosecution)

Mr. Fitzroy Maclean: asked the Minister of Food whether he will now make a further statement regarding the action being taken by his Department in respect of the simultaneous issue in the last week of February of eight weeks bacon ration to the Manor House Hostel, Shanklin, Isle of Wight.

The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): Proceedings having been instituted, the matter is sub judice, and it would not be proper for me to say more in reply to a Question which appears to pre-judge the issue to be tried by the court.

Eire Food Circulars

Mr. Maclean: asked the Minister of Food whether his attention has been drawn to circulars sent from Eire to addresses in the United Kingdom offering foodstuffs for purchase; how far his regulations permit such proceedings; and whether he will make a public announcement on the position.

Dr. Summerskill: Yes, Sir. We have no jurisdiction over traders in Eire who send these circulars, but anyone in the United Kingdom buying rationed foods offered in this way is committing an offence against The Food [Rationing] (General Provisions) Order.

Mr. Maclean: Will the right hon. Lady undertake to give the maximum publicity to that statement, because many people in this country do not realise it?

Dr. Summerskill: Yes, Sir.

Eggs

Captain John Crowder: asked the Minister of Food whether priority and non-priority consumers are entitled to a share of the extra eggs which are now available.

Dr. Summerskill: Yes, Sir.

Fats Allocation

Sir I. Fraser: asked the Minister of Food if he will allocate more butter or margarine to those who pot and preserve shrimps and other fish.

Dr. Summerskill: No, Sir. We are giving the highest allowance possible to all food manufacturers and processors, and we cannot increase the rate of allocation to any specific class of manufacturer at present.

Sir I. Fraser: In view of the shortage of meat, would not the right hon. Lady agree that this would be a valuable way of getting food of a high protein value, such as Morecambe shrimps, and will she undertake to reconsider this question?

Dr. Summerskill: I am very sympathetic, but I must remind the hon. Gentleman that it needs half a pound of margarine for every quart of shrimps.

Air-Commodore Harvey: asked the Minister of Food if, in view of the reduced meat ration, he will increase the fat allocation to enable larger quantities of fish to be cooked in the home.

Dr. Summerskill: The total fats ration has been increased twice during the past 15 months and is now higher than it has ever been since January, 1942. Naturally we shall increase it again as soon as we can, but at the moment this is not possible.

Air-Commodore Harvey: When the right hon. Lady talks about the fat ration, does she realise the necessity and desirability for the people to eat more fish, and that unless they get the fats with which to cook it, they cannot do so because they cannot live on steamed fish? Will she look into the matter?

Dr. Summerskill: I can assure the hon. and gallant Gentleman that we are looking for fats everywhere.

Meat Ration

Sir R. Glyn: asked the Minister of Food what is the estimated number of persons entitled to the higher scale of meat ration; what quantity of meat is thus supplied weekly; and whether, in view of the reduced meat ration in force today, he will consider the need to permit agricultural workers to be in the higher


scale, or to remove all restrictions on pig-keeping by agricultural workers so that they can obtain increased quantities of food.

Dr. Summerskill: The number of consumers who receive individual allowances of meat in excess of the general ration is 1,180,000 involving the issue of 470 tons of meat weekly. In view of the very serious meat supply position, my right hon. Friend regrets that he is unable to allow an increased ration for agricultural workers. An agricultural worker is under less stringent conditions than other pig keepers and is allowed to kill two pigs a year. The restrictions on self-supplier pig-keeping must be maintained for the present in order to prevent abuse.

Mr. Joynson-Hicks: Will the right hon. Lady consider some method of increasing the meat ration for agricultural workers who are unable to keep pigs?

Dr. Summerskill: In the light of the Debate yesterday the hon. Gentleman will agree that things are difficult.

Mr. Odey: Does the right hon. Lady realise that agricultural workers are in a position of special disadvantage as they have no access to works canteens?

Dr. Summerskill: Yes.

Colonel Ponsonby: asked the Minister of Food whether, in view of the decrease in the meat ration, an increased allowance will be made for diabetics whose special ration was fixed when the meat ration was 1s. 4d. per week.

Dr. Summerskill: My medical advisers, the Food Rationing (Special Diets) Advisory Committee of the Medical Research Council, are now considering the whole question of the present level of meat supplies in relation to all classes of invalids, including diabetics.

Potatoes

Mr. M. Philips Price: asked the Minister of Food whether he will state the tonnage of ware potatoes still in clamp on the farms; and what steps are being taken to ensure that the large surplus is being diverted to manufacture.

Dr. Summerskill: It is estimated that there were 2½ million tons of ware

potatoes on farms in Great Britain on 1st March. My Department is very actively engaged in moving the surplus for stock-feeding and processing, and factories are working to full capacity seven days a week.

Mr. Philips Price: Can we be assured that all potatoes of last year's crop, if they do not go for human consumption, will at least find their way into industrial uses?

Dr. Summerskill: Yes, Sir.

Colonel Haughton: Would the right hon. Lady be prepared to consider what I believe to be a practical scheme of linking the profitable consumption of surplus potatoes with the problem of the man or woman who wants to keep a pig? Will she be prepared to consider a proposal which I should like to put before her?

Dr. Summerskill: Certainly, Sir. I am always prepared to consider proposals, especially from the hon. and gallant Gentleman.

Major Legge-Bourke: Can the right hon. Lady confirm that 70,000 tons a week are now going to processing? How long will she be able to maintain that amount?

Dr. Summerskill: Thirty-two thousand tons are going to stockfeeding and I believe that the quantity mentioned by the hon. and gallant Gentleman goes for processing.

Cream (Hill Farms)

Mr. Collins: asked the Minister of Food if whilst milk is derationed, he will permit farmers in hill areas who do not sell liquid milk to make and sell cream under conditions similar to those submitted to him in the Exmoor Scheme in 1947.

Dr. Summerskill: It would be difficult to restrict such a concession to isolated farmers and any widespread manufacture of cream would divert milk away from products which are more urgently required. However, we are looking at the question again and I will write to my hon. Friend as soon as I can.

Mr. Collins: Is my right hon. Friend aware that this scheme relates only to those farms which through inaccessibility


or for other reasons have never been able to contribute to the general milk pool? Therefore it could not possibly affect the milk ration, but-it would help the farmers in such areas.

Dr. Summerskill: I fully realise that, but we are a little fearful lest it might be abused.

Individual Rations (Points)

Mrs. Middleton: asked the Minister of Food whether he will consider increasing the number of points available to households of one person, in view of the difficulties such people experience in getting any satisfactory variety of the foods available on points.

Dr. Summerskill: I am sympathetic to the difficulties mentioned by my hon. Friend but I am afraid it is impracticable to meet them in this way.

Mrs. Middleton: Will my right hon. Friend at least take steps to see that goods under the points rationing system are put up in smaller packages so that people who have only one or two ration books can have a larger variety of foods in their diet?

Dr. Summerskill: I will consider that, but my hon. Friend must realise that it needs more tinplate to provide two tins for two people instead of one tin for two people.

Fatstock

Mr. Baldwin: asked the Minister of Food what was the total head of home produced fatstock, under their separate headings, purchased by his Department for the year 1948.

Dr. Summerskill: The numbers for the United Kingdom were:

Cattle
…
…
1,760,227*


Calves
…
…
1,305,006


Sheep and Lambs
…
…
5,933,796


Pigs
…
…
1,222,169


Total
…
…
10,221,198


*Including 275,693 imported as stores from Eire.

Pig Production, Queensland

Mr. McGovern: asked the Minister of Food the progress made in Queensland in the breeding of pigs for the United Kingdom; and when we may expect deliveries of bacon and what amount is expected.

Dr. Summerskill: The operations of the Queensland British Food Corporation have so far been concentrated on the production of sorghum and pig production is beginning this year only on a small scale. The first export of pork will not take place until the middle of 1950 at the earliest. We have purchased the exportable surplus of sorghum from this year's crop for use as an animal feedingstuff in the United Kingdom.

Mr. McGovern: Has the right hon. Lady any idea of the amount expected by next year?

Dr. Summerskill: I cannot answer that, but I am sure that the Overseas Food Corporation would be only too pleased to give my hon. Friend any details.

Eire (Sausages)

Mr. McGovern: asked the Minister of Food if he will state the total amount of sausages per week offered by Eire; and if agreement has been reached on this offer.

Dr. Summerskill: We had one offer of about 400 pounds weight per week; we are now awaiting samples.

Mr. McGovern: Is it the case that substantial offers have been made to fly sausages over, and in view of the scarcity of sausages here, will the right hon. Lady see that her Department considers such offers sympathetically?

Dr. Summerskill: Certainly, Sir. We are prepared to receive samples by air, but I am sure that my hon. Friend will agree that they must comply with certain meat content requirements.

Yugoslavia (Grain)

Mr. Mott-Radclyffe: asked the Minister of Food whether he will state the quantity of coarse grain imported from Yugoslavia under the trade agreement during the years 1948 and 1949, to date; and the price paid per ton.

Dr. Summerskill: Shipment of the 75,000 metric tons of maize purchased under the 1948 agreement began in January, 1949. Approximately 71,442 metric tons have been imported to date. The contract price was £21 10s. per metric ton, C. and F.

Oral Answers to Questions — DOMESTIC SOAP ALLOWANCE

Mr. Lipson: asked the Minister of Food if he will make a special allocation of soap annually to housewives for spring cleaning.

Dr. Summerskill: The domestic allowance was increased on 30th January last, and I am afraid we cannot do any more at present.

Mr. Lipson: But is not the right hon. Lady aware that the allowance is not sufficient for the purpose indicated, and is not she the most appropriate Minister to make some concession to the harassed housewives?

Dr. Summerskill: In my own case I use some of the unrationed soap substitutes.

Oral Answers to Questions — LEEWARD ISLANDS

Oil Boring Project

Major Beamish: asked the Secretary of State for the Colonies if he will make a statement on his immediate plans to proceed with under-water boring for oil along the coast of the Leeward Islands; what will be the approximate cost of this project over the next five years; and when boring is to commence.

Mr. Rees-Williams: My right hon. Friend is consulting the Governor and will communicate with the hon. and gallant Member when his reply has been received.

Major Beamish: Are we really to understand that although the Governor has stated that this is an immediate project, the Colonial Office has no knowledge of it? Is not that a most extraordinary state of affairs?

Mr. Rees-Williams: That is not the case. The Governor has been asked to consult the Director of the British Guiana Geological Survey with regard to taking the necessary steps.

Major Beamish: Is the hon. Gentleman aware that, on his return to the Leeward Islands recently, the Governor stated that this was an immediate project?

Mr. Rees-Williams: That is what I have said. We have asked the Governor to consult the Director with a view to getting on with it.

Water Supplies (Wells)

Major Beamish: asked the Secretary of State for the Colonies if he will make a statement on his plans to sink wells in the Leeward Islands with a view to overcoming the present shortage of fresh water for agricultural purposes; when this project will be begun; and what will be its approximate cost over the next five years.

Mr. Rees-Williams: A drilling plant is being bought from Colonial Development and Welfare funds and exploratory borings should start in July. The cost of sinking wells if these borings are successful cannot yet be indicated, but £170,000 has been provisionally earmarked for water supplies in Antigua under the development plan.

Major Legge-Bourke: Is there no other way of calming the troubled waters around those Islands?

Oral Answers to Questions — NIGERIA

Tribal Disputes

Mr. Sorensen: asked the Secretary of State for the Colonies (1) what is the present position of the dispute between the Oni of Ife in Nigeria and the Modakekes respecting Ishakole; and what action has been taken to secure an equitable and satisfactory settlement;
(2) how many arrests have taken place in Ijebu-Rems and Ishua in Benin arising from the disturbances in those areas; what is the position respecting the Olishua in Ishua; and what steps have been taken to secure effectual settlement of the grievances underlying the disturbances.

Mr. Rees-Williams: The Governor has been asked for a report on the matters raised, and I will communicate with my hon. Friend when his reply has been received.

Constitution (Report)

Mr. Sorensen: asked the Secretary of State for the Colonies what are the proposed arrangements for ascertaining


representative Nigerian opinion in respect of constitutional advance in 1950.

Mr. Rees-Williams: I would invite my hon. Friend's attention to the Report of the Select Committee of Legislative Council mentioned in the reply given to my hon. Friend the Member for Newport (Mr. Peter Freeman) on 30th March. The recommendations of this Committee have been approved by the Governor, and steps will now be taken to begin the review of the Constitution in accordance with the procedure which the Committee has proposed.

Mr. Sorensen: Can my hon. Friend say how long it is likely to be before the recommendations are implemented?

Mr. Rees-Williams: I am afraid that I cannot say at this stage.

Oral Answers to Questions — TANGANYIKA

Harbour Board

Mr. Skinnard: asked the Secretary of State for the Colonies whether he is aware that in July, 1946, the Government of Tanganyika stated that it was considering the appointment of an African to the Labour Board; whether this appointment has been made; and if there are African members on the Coffee, Cotton and Economic Control Boards.

Mr. Rees-Williams: The Labour Board is now being reconstituted and an African will be appointed to it. There are two African members on the Coffee Board, but none on the Cotton Board. The Economic Control Boards no longer exist, but certain of these functions are now exercised by an Advisory Committee on Price Control of which one member is an African.

Provincial Councils

Mr. Skinnard: asked the Secretary of State for the Colonies what progress has been made in setting up provincial councils in Tanganyika; whether these councils will have African majorities; and whether it is intended that their formation shall lead to the establishment of a Central Territorial Council on which African opinion is fully represented.

Mr. Rees-Williams: A Provincial Council will shortly be set up in the Lake Province but its composition has not yet

been reported. Experience of its working will serve as a guide to the establishment of other Councils which will be representative of all races and interests and will serve as a training ground for African members of the Central Legislative Council. No decision has been made about the formation of a Central Territorial Council.

Mining Royalties

Mr. Skinnard: asked the Secretary of State for the Colonies whether, in view of the low rates of royalty on mining operations in Tanganyika and the failure in that territory to implement any of the important provisions of his memorandum on Colonial mining policy, it is his intention to make a further communication on this matter to the Government of Tanganyika.

Mr. Rees-Williams: I do not agree with the assumptions in my hon. Friend's Question. The Tanganyika Government are carrying out the principles of the White Paper as far as local circumstances permit.

Oral Answers to Questions — SINGAPORE AND MALAYA (WAR DAMAGE)

Mr. Channon: asked the Secretary of State for the Colonies whether consideration has now been given to the recommendation of the Select Committee of the Federation and Singapore Legislative Councils with regard to the question of Malayan war damage compensation, in which it is indicated that the people of Malaya have already contributed to the utmost limit towards restoring their economic life, and that a further 220 million dollars are sought from Great Britain in addition to the 85.7 millions already promised; and if he is yet in a position to state what is to be the liability of the British Government.

Mr. Rees-Williams: Preliminary consideration has been given to the recommendations of the Select Committee but final conclusions cannot be reached pending the return to this country of a member of the staff of the Colonial Office who has been visiting Malaya to discuss with the local Governments the present and future financial problems of the Territories.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Major MILNER in the Chair]

FINANCIAL AND ECONOMIC STATEMENT

3.30 p.m.

The Chancellor of the Exchequer (Sir Stafford Cripps): The experiment which we tried last year of debating the Economic Survey for the year together with the Budget was sufficiently promising to merit repetition this year. I propose, therefore, to deal with the Economic Survey for 1949 this afternoon in addition to my Budget proposals.
It has now become generally accepted that our finances are so closely linked with our economic situation that we must frame our Budget with the fullest regard to our economic plans. I propose, therefore, to deal first with some of the more important aspects of the Economic Survey before I come to the traditional method of dealing with our financial position and my Budgetary proposals.

EXTERNAL ECONOMIC SITUATION

The Committee will recall that a year ago today when I was addressing them, we were still uncertain as to the outcome of the legislation in the United States of America necessary to support the European Recovery Programme. Fortunately, that uncertainty was not long afterwards removed by an assurance of active and generous help, and this assistance, and that given us by the re-opening of our drawings upon the Canadian credit, has enabled us during the past year to get on with the job of our own recovery and of contributing to that of our partners in the O.E.E.C.

We can, I think, claim that we have made excellent use of the opportunity thus afforded to us. The year 1948 has been one of great achievement for the British people, and this fact can, and should, encourage us in the heavy task that still lies ahead of us. For there does, indeed, still remain a serious and baffling problem in our dollar balance, a problem for which we must try to find a solution, in common with the other participants in O.E.E.C. by at latest,

1952,when E.R.P. will have come to an end.

There are a few outstanding indications of our achievements in 1948 to which I would draw the attention of the Committee. The most notable features of the year were the rapid increase in our production and the arrest of the inflationary tendency in our economy. In the result we were able, on our overseas account, to reduce an adverse balance of payments of £630 million in 1947 to about £120 million according to the provisional figures for 1948; and in the latter half of last year we achieved an overall balance in our overseas payments. Despite this welcome fact, however, there remained a formidable deficit on dollar account, amounting over the year to no less than £423 million for the sterling area as a whole. We could, of course, only carry such a deficit with the help of the exceptional outside assistance we have received from the United States and Canada.

One of the factors that increased our difficulties, especially during the first half of the year, was a continuing deterioration in the terms of trade. This meant that we had to export even more goods to buy the same volume of imports. But, despite this drawback, we were able to realise, without further inflation, a small improvement in the supplies of consumption goods generally, and an increase in investment in nearly every field of productive activity—in basic services, agriculture and the manufacturing industries.

Our expansion in exports was most encouraging. We exceeded the targets that had been set, even though many people had proclaimed them as far too optimistic, and the total volume of exports for the year was 135 per cent. of the 1938 volume, an increase of some 25 per cent. over and above the year 1947. And this increase was general over practically the whole field of exports and to almost all destinations. The whole of British industry should, therefore, share our congratulations on these results, and I am sure we were particularly glad to see coal featuring once more as a direct export in considerable volume. The target for the end of 1949 has been set at 155 per cent. of 1938 though, as explained in the Survey, the individual industrial targets add up to a somewhat higher total. The January volume was 162 per cent. and in the short month of


February it was 143 per cent., and we have to try to maintain something between those two rates—an average of a little more than 150 per cent.—throughout the year. That will not be an easy task.

In many countries the end of the sellers' market has been, or is being, reached and, in addition, there are many restrictions against importation of what are considered by the importing countries as less essential goods. It will only be by paying the closest attention to the quality and price of our exports that we shall be able to maintain the necessary volume. Over the year as a whole we aim to increase our exports by 10 per cent. over 1948.

Another marked improvement in 1948 was our net invisible income, which is provisionally estimated as a surplus of £100 million as against a deficit in 1947 of £190 million. This is a field in which forecasting is particularly difficult, but in the current year we expect the receipts from post-war payments and surplus disposals to decline, and though we hope for some decrease in Government overseas expenditure, this must, in the existing international situation, remain a heavy and substantial item.

We hope, however, for a gradual increase in our net receipts from shipping and in the earnings of our oil companies, so that, on the whole, we estimate a surplus of about £35 million for the first half of 1949. Owing to the many uncertainties we cannot go beyond the first six months of 1949 in our estimates, though there is no present reason why the second half should be any worse than the first. Unless, therefore, there is a fall in the prices of our exports, we expect a substantially larger overseas income this year than last year. What we can purchase with that income will depend, of course, upon the terms of trade, and upon what is available in the various markets of the world.

There are some signs that the long period of progressive increase in the world prices of primary products is coming to an end, and the International Wheat Agreement is to be welcomed, both as leading to some reduction in prices and as providing the means to stop a precipitate fall in price, which might be equally disastrous to the buyer as it would be to the seller. We must remem-

ber, however, that a fall in the prices of primary commodities is not necessarily a net gain in our balance of payments, for it is bound to react upon our own export prices and must also affect the amount of dollars earned by the sterling area from the sale of primary products to North America.

The forecast for the first half of 1949 shows a marked increase in imports of raw materials, a large part of which is to make up for a shortfall in imports in the last half of 1948, and there is a more modest increase in food and feeding-stuffs. We thus expect to be able to maintain adequate supplies of raw materials, except where there is a world shortage.

It is not possible, as yet, to say with any certainty what our position will be as to the importation of animal feeding-stuffs, though we hope at least to be able to maintain the existing ration scales. With the greatly improved methods of grass conservation fully developed and applied, we should be able to increase our livestock and yet decrease our dependence upon imported feedingstuffs. There should be a small improvement in the supply of foodstuffs generally, with the exception of meat, on which the supply difficulties have been reported to the House by my right hon. Friend the Minister of Food. [HON. MEMBERS: "No."] In general, we should be able to maintain a high enough level of imports of raw materials throughout 1949 for a somewhat increased volume of production, and of foodstuffs to maintain at least our present standards.

So far as our overall balance of payments is concerned, we hope to maintain the approximate balance we have now achieved. Thus, for the first time for very many years the value of the goods and services we receive from the rest of the world is being matched by the total of the goods and services which we export to or perform for the rest of the world. To have reached that state of affairs should give us honest satisfaction, and should make us determined not to go back from a position which we have won with such great and sustained efforts. [AN HON. MEMBER: "Not yet."] But we must not allow it to conceal from us the size and gravity of our dollar deficit that remains. Even to maintain our overall balance requires a continual and continuing effort. Amongst the many factors


that are against us, one is the difficulty we must expect from increased competition. Our export drive owes part of its success to our quick start after the war; but for this very reason we shall find it increasingly difficult to maintain our high volume of exports as the growing efforts of other countries bring sharper competition.

GOLD AND DOLLAR POSITION

We have certainly improved our gold and dollar position greatly since 1947, when we had a deficit of £1,024 million. We have now just completed the first year's operations under E.R.P., and in that period our gold and dollar deficit has been £358 million. The figure for the first three months of 1949 was £82 million, compared with £107 million in the second quarter of 1948; £76 million in the third quarter; and £93 million in the fourth quarter. Our E.R.P. allotments for the 12 months, together with drawings on the Canadian credit and other available resources, have been just enough to cover this deficit, although, of course, our visible reserves have in fact fallen because we have not yet received full reimbursement for our purchases of items which it has been agreed shall be bought out of E.C.A. funds.

At the end of last month, our reserves stood at £471 million, as compared with £552 million at the beginning of E.R.P. In very broad terms, therefore, we have succeeded in carrying out the policy I announced last year of restricting our dollar expenditure to what could be covered by our dollar earnings together with the aid at our disposal, and we intend to continue upon that policy for the rest of the E.R.P. period. If we were to go back on it our external financial position at the end of the period would not be strong enough to enable us to meet any emergencies that might arise, and to play our full part as the centre of the sterling area in a system of expanding world trade.

The remaining dollar deficit of £360 million a year is a vast figure, and it is this huge deficit which we must get rid of in the next three years. The size of the deficit, and the speed with which it has to be eliminated, must, I am sure,

convince the Committee that we are still faced by a tremendous task.

For the first full fiscal year of Marshall Aid the Committee will remember that the O.E.E.C. recommended that we should be allocated 1,263 million dollars; for the second year—July, 1949, to June, 1950—we have asked for 940 million dollars. This indicates a reduction by 25 per cent. of our dependency upon aid; but it still leaves a very large figure, which is, however, the least amount that we consider necessary to enable us to maintain our full build up for recovery and development and, which is important, to help the other O.E.E.C. participants, who cannot succeed in their recovery without sterling assistance. We do not yet know, of course, how much aid will be voted by Congress for 1949–50, or how O.E.E.C. will finally recommend that the aid so voted should be divided up amongst the participating countries; but there is no doubt whatever as to the need for continuing aid.

The eventual solution of our dollar problem can be founded only upon firm and resolute action on our part, associated with an enlightened policy of importation in the countries of the Western Hemisphere. We have, during the past year, followed those lines of attack upon the dollar problem which were laid down in last year's Economic Survey, and which are repeated, many of them, in the Survey for 1949.

Home agriculture, with much better harvest weather, made great strides forward, and the numbers of livestock show large and most welcome increases. Overseas plans of development are going forward, in close consultation with the Governments of the Dominions and Colonies, and a great deal has been done to improve and expand our own production in the field of manufactures, especially where such expansion can earn or save dollars. We have succeeded in bringing down our imports from the Western Hemisphere from 46 per cent. of our total imports in 1947 to about the pre-war figure of 32 per cent. in 1948; this was due to the gradual restoration of production—or, in some cases, its increase—in the rest of the world. But we must not look upon this problem as one primarily of reducing imports. Our aim is to balance our trade with the Western Hemisphere at the highest possible level


of exports and imports, and not at the lowest.

It is up to us, therefore, to concentrate our skill and energy of both production and salesmanship upon increasing our exports to the North American continent. Canada and the United States provide a large and prosperous market, which we are not yet cultivating as strenuously as we might. It is a difficult market for us in many ways, and the internal competition is intense. Nevertheless, I am convinced that we can, and must, do more to establish ourselves in these markets—not merely as a temporary device, to bring about a momentary balance of trade—but as a permanent factor in achieving once again the conditions in which multilateral trade in the full sense, and free convertibility of currencies, can operate. My right hon. Friend the President of the Board of Trade, who hopes, Major Milner, to catch your eye in the course of this Debate, will deal in more detail with this problem of our exports to Canada and the United States, and how best it can be tackled.

EUROPEAN ECONOMIC CO-OPERATION

Now I come to our work in the field of co-operation with the other countries who are members of O.E.E.C. The Convention lays down that the first and most urgent task of the Organisation is the elimination of the dollar gap. During the past year we have sought to give the lead in O.E.E.C. in securing the adoption of policies by the participating countries which were, in our view, best calculated to bring about the most rapid elimination of the need for dollar aid. I have already given the House, on a number of occasions, accounts of these proceedings in Paris, and I pointed out, on the last occasion, that the interim Report to the E.C.A. on the Four-Year Programmes disclosed many great and urgent tasks waiting to be performed by the participating countries, if they were to achieve the objective on which all are agreed—that is independence of extraordinary dollar aid by 1952.

Since then, I have spent some time in Paris on two occasions, first for the setting up of the President's Consultative Group, and thereafter for its first full meeting. This Group, which is composed of senior Cabinet Ministers from the countries represented on the Executive Committee, meets either without, or with very few,

officials present, and its meetings are conducted in private and in confidence, so that full and frank discussion can take place. I hope this may prove a successful experiment, and enable the Organisation to plan and instigate that action in the individual countries by which alone effective co-operation between them can be achieved. We have made our view clear that action now taken, or not taken, must vitally affect the recovery of Western Europe, and its ability to achieve its economic independence. There is no magic formula which can take the place of hard work and disciplined action, and it is to this hard, and perhaps sometimes unpleasant, task that the participating countries must now go forward in co-operation.

There is one final aspect of our own external economic affairs that I must mention, that is the surpluses which we are currently earning in our trade with certain other countries. Obviously, if we are in overall balance, but are at the same time running a large dollar deficit, we must be in surplus with some other parts of the world. We cannot, of course, even if we wished to, solve this problem by the easy transfer of either exports or currencies.

As the 1949 Survey explains, these surpluses are, to a large extent, planned surpluses, in that they arise from the aid which we are granting other O.E.E.C. countries, from overseas investment which is essential to the development of the resources of our overseas territories, or from a moderate drawing down of sterling balances accumulated during and after the war, which are now being used to develop new world resources of raw materials and foodstuffs. All this means that we are, in fact, making a very considerable contribution to the increase of world supplies and the recovery of other countries, which will redound to our own advantage, as to that of the rest of the world, in the years that lie ahead.

INTERNAL ECONOMIC SITUATION

I now turn for a few moments to our internal economic situation. Despite a small decline in our working population, the further reduction in numbers on release leave and in the Armed Forces brought about an increase in the industrial population during 1948, of 300,000 more workers, nearly all men.

We expanded our production in all the critical sectors of our economy, though we did not reach our manpower targets in full. One of the reasons for the large increase in production was undoubtedly the general improvement in stocks of both materials and components. Though we may fairly hope that production will continue without any interruption through 1949, there are still a few critical sectors, such as coal, iron and steel, textiles, and agriculture, and these are dealt with in some detail in the Survey. We certainly cannot afford to relax our efforts in these, or any other, sectors of our economy during the coming year.

In 1947, the Committee will remember, we published a separate White Paper on investment for 1948; but this year the main features of the Investment Programme have been dealt with in an Appendix to the Economic Survey, which is really a more convenient method, as it brings all the essential figures together in one document. A considerable discrepancy is disclosed between the investment forecast for 1948 and our present estimate of the investment that actually took place. This needs a little explanation. The planning of investment is, of course, a most essential part of our general planning mechanism; but it is a new field, in which it is difficult to obtain exact or comprehensive statistics.

In the Survey for 1948 there was an under-estimate of certain types of investment, particularly in the fields of construction and installation. This underestimate accounts for about £205 million of the difference between the figure of £1,420 million for gross fixed investment given in the estimate and the present figure—at similar prices—of £1,850 million for the investment actually achieved. The balance was due to our deciding, once Marshall aid had become an accomplished fact, that we could allow more building, both of factories and houses, than we had expected, and also to the better supplies of steel, which enabled us to manufacture, and retain for capital investment, a greater volume of plant, machinery and vehicles than we had ever anticipated. The difference between the £1,850 million I have mentioned and the figure of about £2,000 million given in the current Economic Survey is accounted for by the rise in prices.

It is also estimated that total investment, as distinct from gross fixed investment, rose during the year, because of an increase in working stocks, which was a natural result of the rising production. This increase in total investment, above what we had estimated, should be regarded as a real achievement, since it took place without any further inflation, as I shall show in a moment, and was accompanied by a large increase in exports and the maintenance of our living standards. This unexpected contribution from an increase in production, greater than we had reckoned upon, is a most valuable addition to our future industrial strength and to the welfare of our people It is most satisfactory that we were, in fact, able to channel this extra effort into much needed investment and social improvements.

There is one important detail of our fixed investment that I must mention. Our forecast of last year as to electric generators has, unfortunately, turned out much too optimistic, partly as a result of previous lack of co-ordination in programming supplies, a defect which has now been overcome. The utmost efforts are being made to push forward with the construction of the power stations, but the best that can be done will inevitably leave us with a considerable shortage of generating power at peak load for some years to come. This will entail the maximum of economy in the use of electric power at times of peak load.

The investment plans for 1949 emphasise the need for further industrial expansion and modernisation, and for the necessary capital expenditure upon the programme of agricultural development. Investment in the social services as a whole should be very little less than last year, with a slight decline in the total cost of housing activities, partly due to the more rapid completion of permanent houses and partly to the successful completion of the temporary housing programme, and with an almost corresponding increase in capital investment on education, health services and water supply.

In total, fixed investment in 1949 is expected to show a small advance over 1948. This cannot be large, since the building and engineering industries are already fully employed, and the export


programmes for 1949 call for some increase of engineering goods over the rates achieved in the last quarter of 1948. On the other hand, the additional investment in goods in process and stocks will certainly not be as large as last year, so that the total call on national resources for investment is likely to be about the same in 1949 as in 1948, with a tendency, if there is any change, to be rather less.

Our general investment policy must, of course, find its full reflection on the financial side; so I propose formally to invite the attention of the Capital Issues Committee to the principles set out in the Economic Survey, so that they may judge any proposals to raise money for new capital purposes according to these criteria.

The Survey brings out strongly the need for higher productivity in every industry and occupation. We cannot expect any further increase in our labour force. We must, therefore, find the extra resources to carry through all our manifold obligations and to lighten our own burdens from the higher productivity of our available man-power. In this respect 1948 was certainly a most encouraging year, but it was undoubtedly influenced in no small part, as I have said, by the better supplies which became available of both raw materials and components, and by the generally smoother flow of production which resulted.

We have estimated a further 2½ per cent. increase for 1949. This is a minimum, which must be attained, and I hope, may be exceeded. We have done our utmost, as a Government, to encourage both sides of industry to drive forward for greater productivity, and we have been greatly encouraged by what has been done by the leading organisations of both employers and workers. It is now for the individuals, management and workers, to follow the lead given them by their.own organisations, and to carry through with the work in their own units.

DISINFLATION

I now turn to another very important aspect of our finance planning—the degree of inflation or disinflation which exists, and what we ought to do about it in this current year. There has been a great deal of discussion lately, not only in this country but in nearly every country in the world, as to whether or not a period of deflation is beginning,

and, if so, how suddenly it is likely to break upon us. As I have already pointed out, there is a tendency for prices of primary commodities to fall, and this tendency has quite recently started to invade the field of metal prices. It is being said that there is already a healthy degree of disinflation proceeding in U.S.A. These indications in other countries are, of course, important matters for us, of which we must take full account; but our first attention must be paid to our own situation.

Last year, it was our avowed objective to counteract the then existing inflationary pressure—as to which there was no doubt—and to bring about a comfortable, and not excessive, degree of disinflation. This, I think, we have succeeded in doing, largely as a result of the considerable Budget surplus, which was planned last year and has been realised in the last three months. There is of course no absolute criterion by which to judge how far if at all, disinflation has proceeded. We can, however, examine certain important evidence, and we must then use our own judgment, taking into account all the smaller, and less certain, evidential factors.

During the year there was full employment, and a high demand for labour. But the vacancies notified to employment exchanges fell steadily, and though they are still in excess of the number of unemployed available, the situation is coming into better balance. To any who are disposed to suggest that disinflation has proceeded too far, I would point out that the figures of unemployed which were 375,000 on 10th January dropped to 360,000 in mid-February, and that the preliminary figures for March, which are of course subject to confirmation, indicate a further decline in unemployment. It looks as if the mid-March figure will be a little more than 340,000.

There has also been over the year a considerable release of controls. Bread, jam, confectionery and clothing, are amongst the more important consumption goods released from rationing. It is also true to say that many goods are in more easy supply in the shops, additional to those which have been taken off the ration. Moreover, it is to be noted that the index of retail prices, which stood at 108 on 13th April last, had risen only one point to 109 by the middle of


February; while over the same period wages had moved only three points from 105 to 108. Wholesale prices, which are, of course, much more affected by the cost of imports, and which rose from 185 in April, 1947, to 216 in April, 1948, only increased to 218 in February, 1949, a negligible increase. These results, placed against a background of full employment and of moderate de-rationing, are highly satisfactory, and certainly denote that the heavy pressure of inflation has been easing off.

There can be no doubt that a great deal of the credit for this improved state of affairs is due to the response, on all hands, to the plea for restraint put forward in the White Paper on Personal Incomes, Costs and Prices, which was published shortly before the last Budget. No one can doubt, in the light of what has happened since, the correctness of that approach or the importance of that appeal. As the financial facts of our present situation and their implications for the future become clear, it will, I am sure, be appreciated that we have just as much need for that policy of restraint today as we had a year ago; and I take this opportunity of impressing its need once again upon the country.

The general economic picture which I have given, of a mild, yet effective, degree of disinflation in this country, is strengthened by a consideration of the fiscal record of the past year. The total of the National Debt outstanding on 31st March, 1949 is £25,168 million, a fall of £453 million since 31st March, 1948. That happy result arises from two causes; first, the overall Budget surplus which has been realised, and, second, the sterling proceeds of the Marshall Aid Special Account, of which £107 million has been applied, with the consent of the Government of the United States of America, to the redemption of short-term debt.

Debt has never before been redeemed on anything like such a scale, and the operation has, therefore, naturally aroused a great deal of interest during the year. There has not been, as was expected in some quarters, any direct correspondence between the surplus and the amount of money in circulation or the volume of bank deposits. The latter are affected by many things besides the

surplus itself. But the figures are nevertheless of some interest.

The total reduction of internal debt was £495 million. The note circulation, which was £1,245 million on 31st March, 1948, was £1,250 million on the corresponding date this year. Bank deposits, too, were practically level at £5,622 million in March, 1949, compared with £5,609 million in March, 1948. In this connection, it should be noted that a large part of the Budget surplus has necessarily been applied to meet floating debt maturities which arise from the reduction in sterling balances of overseas holders.

The main object of the Budget surplus of last year, as I then stated, was to raise enough revenue to cover not only the Government's current expenditure, but also that part of the investment programme that could not be safely left to be financed by private savings. If I had not done enough, there would have been further inflation; and bank deposits might have risen, because of excessive borrowing to provide funds for investment. The fact that they have not increased in volume is therefore a cause for satisfaction. We have thus achieved a balance between national income and national expenditure on current consumption and investment, and the resulting situation is far healthier than it was 12 months ago. Our task this year will be to maintain that good health.

FINANCIAL RESULTS

I now turn from the economic picture to examine the financial results of the past year and the prospects for the coming year. But I am sure it will assist the Committee if I start with some explanation of the alternative methods by which I shall have to measure our financial results and prospects in the course of my speech and in the Financial Statement.

There is, first, the traditional basis upon which the Budget has been balanced, taking into account only the revenue and expenditure recorded "above the line." Receipts applied to debt redemption and receipts applicable by statute to debt interest, otherwise payable out of revenue, are treated as receipts "below the line," and, on the payments side, those payments for which the Treasury has power to borrow are also placed "below the line." All other


receipts and payments appear "above the line." If, excluding the" below the line "items, receipts exceed expenditure, the resulting conventional surplus I will refer to as the" above the line" surplus.

The second kind of surplus or deficit with which we are concerned is arrived at by taking into account all Exchequer receipts and payments, whether they appear above or below the line in the conventional Budget accounts. The comparison here is between the total of receipts and payments of all kinds, however classified. If all the receipts exceed all the payments, I will refer to the results as an "overall surplus."

The third form of presentation is to show receipts and payments on true revenue account only. For this purpose, all Exchequer receipts and payments, whether they appear above or below the line, are taken, and there is then deducted from both sides of the account all items which are of a loan, or non-revenue, character. A surplus so shown I will refer to as "a true revenue" surplus. By the word "true," I am not, of course, claiming that final accuracy has been reached, but rather indicating the object of this form of presentation.

This third form of presentation was given for the first time in the alternative classification in last year's Budget. Its object is to give a measure of the comparative effect of successive Budgets on the general economy. The Committee will remember that in 1948 its application was confined to the realised surplus for 1947. On the conventional, or "above the line," basis that surplus was£636 million. Under the alternative classification it became a surplus of £338 million. When I gave those figures I emphasised the experimental character of this alternative classification and invited criticism upon it. Various experts have responded to that invitation, and much useful thought and discussion has resulted. The matter is too complicated however—with its repercussions upon the form of Government accounts beyond the strict field of Exchequer accountancy—to be settled in a short time.

I have repeated this classification this year, but still as a provisional exercise. There have been one or two slight modifications of definition, but nothing to impair the comparison with last year's figures. The financial statement this

year will, however, carry the matter a little further, in that it will contain the alternative classification not only of the out-turn of 1948–49 but also of the estimates for 1949–50 as they will stand if my Budget proposals are accepted. Thus there will be provided, for the first time, a detailed forecast of the items making up the Government's non-revenue receipts and expenditure in the coming year, and it will be possible to compare the true revenue surplus as realised in 1948 with the result we hope to achieve in 1949. That will enable us to compare the inflationary, or disinflationary, power of the two Budgets.

The surpluses actually realised on 31st March for the last financial year were £831 million above the line, £352 million overall, and £684 million true revenue, compared with the estimated figures of £789 million, £330 million and £609 million, respectively. Those will be found on pages four and five of the Blue Paper. The out-turn is sufficiently close to the forecast, but neither revenue nor expenditure has turned out according to plan. Far from it. Expenditure has exceeded the original estimates by £200 million, but that has been matched, fortunately, by increased revenue. The distressing fact is that, while the items on the expenditure side are almost certain to persist, the same cannot be said of some, at least, of the items on the revenue side.

REVENUE

The total revenue was £4,007 million, or £242 million more than the estimate of £3,765 million. Of this total, Customs and Excise duties accounted for about £1,557 million, a surplus of £10 million over the estimate.

Smokers were responsible for the unprecedented total of £604 million or £24 million above the estimate. On the other hand, the receipts of £418 million from beer and other alcoholic liquors were £23 million less than estimated, due to decreased consumption. Purchase Tax brought in £291 million, a surplus of £9 million over the estimate.

Betting duties produced almost exactly the estimated £23,500,000, though the new licence duty on bookmakers brought in only £1,750,000, compared with the £3 million estimate. This deficiency is partly due to the decline in the number of people employed, which is all to the good,


and partly to the bookmakers transferring their activities to the cheaper enclosures. Football pools produced £12,250,000, and totalisators on greyhound racecourses £9,500,000, which was the estimate.

Inland Revenue duties have produced £2,058 million, an increase of £143 million over the estimate of £1,915 million. Stamp duties were £1 million up at £56 million; Surtax £8 million up at £98 million; Profits Tax and Excess Profits Tax together gave £279 million, an increase of £29 million. Income Tax, which was estimated at £1,309 million, produced £58 million more, at £1,367 million. Death Duties gave £177 million, an increase of £17 million, due to a somewhat higher level of Stock Exchange prices than had been anticipated. Miscellaneous Duties were £1 million.

The response to the appeal for early payment of the Special Contribution was quite remarkable. There was an immediate response, and altogether the receipts amounted to nearly £80 million in a year, an increase of no less than £30 million over the estimate of £50 million. I should like to pay a tribute to the public spirit of those taxpayers who have contributed to this excellent result.

Motor tax brought in £53 million, an increase of £3 million over the estimate. Non-Tax Revenue receipts were £339 million as against the estimate of £253 million. Trading services realised £28 million (£29 million less than estimated), but miscellaneous revenue was £181 million, or £113 million more than the estimate of £68 million. This excess was due to the payment for war stores from India under the settlement concluded last July, which had not been provided for in the Budget.

EXPENDITURE

If we now turn to the expenditure side we find that, compared with the actual estimate of expenditure of £2,976 million, the out-turn was, in fact, £3,176 million, an increase of £200 million. The cost of interest on National Debt and other Consolidated Fund services, including £23 million for sinking funds, was £542 million, against the estimate of £534 million. The increases on Supply services have already been examined in detail, when the Supplementary Estimates were authorised by the House. The Supple-

mentary Estimates amounted to £309 million. The principal ones were £87 million for Defence, £52 million for food, and £58 million for national health. Set against these increases were savings, amounting in all to £117 million, making a net increase of £192 million, compared with the original Budget provision of £2,442 million.

Let me now, in the light of these results, return to consider the policy which we should adopt, so far as the disinflationary aspect of our planning is concerned. I have said that, during 1948, we succeeded in reaching a valuable degree of stability, which we must now preserve. In other words, we must see that the total calls made on the national income by all our different kinds of expenditure balance against that income, without creating any inflationary pressure.

Comparing these calls between the years 1948 and 1949 in the light of the figures in the Economic Survey, the first thing to observe is that there is a change in the foreign balance. We expect, in 1949, to be in balance, compared with being in deficit to the extent of £120 million in 1948. Strictly, therefore, we ought to withhold that amount of purchasing power from the home market. But we must remember that, over the last half-year, we have, in fact, been in balance, so that we can discount a good deal of the effect of this difference, which has already been dealt with by what we planned and carried through last year.
For investment, we estimate our needs as practically the same, or, allowing for the smaller increase in working stocks, perhaps slightly lower. At any rate, they will need no more financing than last year. On the other hand, Government expenditure shows a large increase between the two fiscal years, principally relating to defence and to the various social services, health, education and so forth. These must, of course, be paid for out of the national income, and the Government's share of the cost must be found by the Budget; so that it is quite impossible to reduce this Government expenditure—and, therefore, taxation—so long as defence and social services are provided on the present scale.

When I hear people speaking of reducing taxation, and, at the same time, see the costs of the social services rising


rapidly, in response very often to the demands of the same people, I sometimes rather wonder whether they appreciate to the full the old adage that "we cannot have our cake and eat it." This last year the people of this country have enjoyed an unexampled national dividend in the form of a free Health Service, at the cost, for the nine months of its operation, of £208 million. [An HON. MEMBER: "Free?"] Free to the individual. Next year, for twelve months, it is estimated to cost £260 million. It is not possible to get increases of benefits of such an order at the cost of the Budget, and, at the same time, to experience decreases in taxation.

We must, therefore, make adequate provision to meet this Government expenditure. It is recurrent expenditure, and forms part of the current standard of life, which, as a community, we have chosen for ourselves. Such expenditure must be paid for out of the current income of the community, by taxation. If we do not do this unflinchingly, we shall face inflation. Inflation is not an evil that, once checked, disappears; the threat remains, and we must be on our guard against it.

For the same reasons, investment, other than that financed by the Government surplus, must be financed by savings—by private savings, that is, savings put aside by companies and other organisations which have investment programmes, or by personal savings, that is, savings put aside by individuals. As regards private savings, there will be an automatic increase in the allowances for depreciation, since these allowances are calculated as a percentage of the higher costs of new buildings and plant; and, if we maintain the dividend limitation policy, as industry has promised to do, we shall continue to have considerable private savings in the form of undistributed profits, though probably not much in excess of those of last year, which amounted to about £500 million. I do not think we should calculate upon any very large increase in the volume of personal savings, but as to this I will say a few words presently.

On the whole, therefore, in view of the general world tendencies which I have mentioned, and the check on the growth of inflationary pressure which we have manifestly secured during the past year, and which has probably not yet entirely

worked itself out, it seems that we should follow the same general policy as last year for our Budget, though not with so sharp an accent upon the urgent need to check inflation. We shall certainly need an over-all balance on the right side, though not so large an over-all balance as we realised last year. Similarly, we should aim at a true revenue surplus which, while in itself very substantial, need not be so large as that realised last year.

These are my broad general conclusions on the disinflationary aspect of the Budget. I would emphasise again what I stressed last year, that, with the many great uncertainties in the situation, we must remain alert to watch the trend of disinflation, and to arrest it if it threatens to widen into a generally harmful deflation. The volume of investment, and the level of savings, as well as of personal expenditure, may be affected very rapidly by the state of mind of the community—or sections of it—whether they are optimistic or pessimistic. World economic conditions may vary swiftly, in a manner completely outside our control. It is, therefore, a most essential aspect of our planning that it should contain as large a degree of flexibility as possible, so as to enable us to adjust our fiscal and financial situation rapidly to any new circumstances, once we are convinced that an important change is really taking place.

I will now turn to examine the prospects for 1949–50 on the existing basis of taxation. Consolidated Fund services this year will need £527 million, including £485 million for the service of the Debt. I should, perhaps, at this point, say a word about the prospects of debt redemption in the coming year, and of National Savings. I should expect to be able, in this year also, to use any surplus there may be from the Budget, together with the other funds which make Exchequer cash available, and, in particular, the Special Account sterling under E.R.P., for the reduction of short-term debt in the hands of the banks and the market. In that connection, I may say that I have decided not to avail myself of the first redemption date, 1st August next, for the £714 million of 2½ per cent. National War Bonds, 1949–51.

The National Savings movement, which is widespread and deeply rooted in the habits of our people, has been steadily at work during the past year, though the net results are somewhat below expecta-


tions. The value of this great voluntary movement lies, not only in its collection of new savings, but in its influence in retarding withdrawals, as the temptation to spend increases with the greater availability of goods. These small savings are an integral and important part of our whole effort to avoid inflation, by providing sufficient savings to meet our investment needs, and I very much hope that in this financial year we shall realise a substantial net surplus of savings. Last year, I asked the National Savings movement to take abstention from spending as its central theme. They have carried out my request with the utmost loyalty, and abstention from spending must continue to be their objective for 1949. But this year I am confident that the movement will also bring home to the public that voluntary savings have a positive function—the financing of the investment programme, which, in its turn, is essential to our recovery. I rely upon the Savings Movement to take up this theme, and I can assure them I shall be ready to cooperate with them most fully in linking the savings effort with the national recovery effort.

FINANCIAL PROSPECTS

I now return to the prospects of 1949–50. The total Supply expenditure-for the year, as provided in the Estimates submitted to Parliament, is £2,784 million. This is an increase of £342 million over the original estimates for the previous year, and of £150 million over the actual out-turn. But for certain decisions made in connection with the Budget, to which I will presently refer, these Estimates would, in fact, have been £103 million greater, that is £445 million more than last year.

Then, I was able to point to a long list of savings, as the Committee will remember, amounting to £400 million, including over £200 million on Defence. But this year Defence is up by £67 million, and the cost of the Social Services—as the published Estimates show—has risen sharply. The total Estimates of expenditure, therefore—but for the decisions which I have just mentioned—would have been £3,414 million.

As regards revenue on the existing basis of taxation, changes in rates introduced last year will now have effect over the full 12 months. A full year's cost of the

Purchase Tax concessions must, therefore, be allowed for, including the extensions that have been made in the utility exemptions to cover a wider range of furniture, clothing, and footwear. It is estimated that the Customs and Excise receipts, on the existing basis of taxation, will be as follows:

Alcoholic drinks
£407 m.


compared with
£418 m. last year


Tobacco
£625 m.


compared with
£604 m. last year.


Purchase Tax
£250 m.


compared with
£291 m. last year.


Entertainments Duty
£45 m.


compared with
£47 m. last year.


Oil
£63 m.


compared with
£57 m. last year.


Betting
£23 m.


compared with
£23 m. last year.


Import Duties Act
£40 m.


compared with
£42 m. last year.


Other Customs and Excise Duties
£82 m.


compared with
£75 m. last year.


Making a total of
£1,535 m.


compared with
£1,557 m. last year.

For Tobacco Duty we are working on the basis of a 4 per cent. increase in consumption, for which the necessary supplies of tobacco will be made available, included a small increase in our purchases of North American tobacco.

Inland Revenue Receipts, on the existing basis of taxation, will, in the aggregate, show a small increase, although some yields will be down. I estimate as follows:

Death Duties
£165 m.



(£12 m. down)


Stamps
£50 m.



(£6 m. down)


Special Contribution
£25 m.


(That is all that remains to be collected).


Excess Profits Tax has virtually come to an end, but with Profits Tax the combined yield should be
£240 m.


(compared with
£279 m. last year)

Surtax should be up £7 million, at £105 million and Income Tax up £113 million at £1,480 million.

This last item reflects, in the main, the higher profits of 1948, which come under charge this year. The total, including £1 million for Miscellaneous Duties, is thus £2,066 million, an increase of £8 million over last year.

Finally, we come to other Revenue: Motor Duty £54 million, an increase of £1 million on last year; Surplus Stores £44 million against £99 million last year; Trading Services £18 million, compared with £28 million last year; Broadcasting Licenses and Crown Lands, the same as last year, £13 million; Sundry loans £20 million, an increase of £2 million over last year; and Miscellaneous Receipts £50 million, against last year's receipt of £81 million, leaving out of account the special receipt from India that I mentioned earlier. The total of these other items of Revenue is £199 million, producing a total Revenue, on the existing basis of taxation, of £3,800 million.

The items "below the line" are, naturally, mainly expenditure, being the capital outgoings of the Government, against which there is little by way of capital receipts. Expenditure at £518 million includes, as its two largest items, £220 million for loans to local authorities, and £164 million for war damage, including provision for public utilities under the Bill which is now before the House. Receipts "below the line" are put at £62 million.

The result is to show, for 1949–50, on the existing basis of taxation, and before taking into account the decisions I referred to a few moments ago, an "above the line" surplus of £386 million, compared with £831 million last year, an overall deficit of £70 million compared with an overall surplus of £352 million last year, and a true revenue surplus of only £408 million, compared with the £684 million last year.

GOVERNMENT EXPENDITURE

This reduction, or elimination, of the surplus arises primarily from the increase in Government expenditure. The three main ingredients in this increase are Defence, Food and Social services. So far as Defence is concerned, we obviously cannot look for any marked reduction for some years, unless there is a complete change in the international situation. Indeed, we may have to face some increase,

as a result of our co-operation in making the defences of Western Europe more effective and efficient. So far as food is concerned, that is a matter of the subsidies, with which I will deal in detail in a moment.

The Social Services are a permanent and continuing obligation, and that obligation is one which automatically increases as those services inevitably develop. Let me remind the Committee of some of the bigger social services Estimates for 1949: The two Education services (England and Wales and Scotland) £208 million; the two Health Services (England and Wales and Scotland) £260 million. National Insurance (the contribution of the Exchequer to the Insurance Fund, and the cost of family allowances) £208 million, and National Assistance £87 million. Here, in four blocks of services alone, we have benefits amounting to £763 million.

A great part of this expenditure relieves the individual, or his or her friends and relations, from charges which would otherwise full upon them. There is a true compensating saving in private and personal expenditure which must be reckoned a real saving to the individual, and this is additional to the benefit of the better services which are made available. But the cost in 1949 is not the end. Education must become more costly as more of the promised reforms come into operation. In addition, the increase in the birth rate, and the lower death rate among young children which all of us delight in mean that there will be one million more children to be educated, and 33,000 more teachers required, for this reason alone.

The same is true of the Health Services—the more and the better the services given, the more must be the cost. If, for instance, the 60,000 beds at present closed for want of staff are brought into operation, as we all hope they will be, then another £15 to £20 million will be added to the cost of the Health Services. The cost of social insurances will increase in the same way, particularly pensions, and the cost of them to the Exchequer will increase proportionately still more.

These Social Service expenditures will, therefore, inevitably increase over the next five or ten years. In 1946, it was


actuarially calculated that the cost of National Insurance benefits would rise from £452 million in 1948 to £545 million in 1958, of which the Exchequer share would rise from £118 million to £190 million. Nothing can stop this, except the cutting down of the Social Services themselves, and that I do not believe anyone is prepared to recommend, because we all know their immense value to the people of this country.

We must, therefore, recognise the unpleasant fact that these services must be paid for, and they must be paid for by taxation, direct or indirect. There are, of course, economies that we can make, and are making, in our administration, particularly as regards terminal expenditure from the war, and temporary services arising out of the war. But these economies are, in the main, in terms of fractions of a million, whereas the new expenditure, of which I have been speaking as regards Social Services increases by tens of millions. We have, therefore, to face the fact that as long as the Defence Forces and the Social Services are maintained, whatever Government is in power a very high rate of taxation will continue to be necessary.

When considering this matter, we must bear in mind the very great and highly desirable redistribution of wealth that has already taken place over the last few years within our community. To a large extent, this has resulted from the provision of these extended Social Services—services for the less well to do at the cost of the more well to do—thereby making more equal the shares of the national income enjoyed. This has been a purposeful policy, I think most successfully carried through.

But there is not much further immediate possibility of the redistribution of national income by way of taxation in this country; for the future, we must rely rather upon the creation of more distributable wealth than upon the redistribution of the income that exists. Total taxation, local and national, is now more than 40 per cent. of the national income, and at that level the redistribution of income entailed in the payment for Social Services already falls, to a considerable extent, upon those who are the recipients of these services.

We must, therefore, moderate the speed of our advance in the extended application of the existing Social Services to our progressive ability to pay for them by an increase in our national income. Otherwise, we shall not be able to avoid entrenching, to an intolerable extent, upon the liberty of spending by the private individual for his own purposes. Hon. Members will recall that their traditional role is to be the defenders of the taxpayer against the rapacity of the Executive. Over many years now, the widening of the franchise and the introduction of services of immediate personal benefit to the people have naturally led Members on all sides of the House to take a keen interest in services of such benefit to their constituents and to press for their extension.

The roles of the private Member and the Executive in relation to expenditure have thus tended to become reversed. But do not let us forget that the House of Commons' responsibility for finance still remains, and cannot be abrogated, and that while Members may press for all round increases of expenditure, the time comes, as it has come today, when they have the responsibility of finding that money and meeting their own demands. I would venture to hope that, when demanding future increases for the services in which they are interested, hon. Members will keep fully in their minds the other side of their responsibilities.

Looking at Government expenditure as a whole, I have thought it advisable to issue today a Treasury Circular asking all Departments to review again the expenditure which is likely to flow from the development of existing policies, so that it can be kept within the bounds of what is considered feasible. In particular, I have emphasised that only in special cases, such as, for example, major changes of policy, can any Supplementary Estimates in future be permitted.

FOOD SUBSIDIES

I now turn to deal with the very important matter of food subsidies. Let me first state the bald facts of the situation. During the war, these subsidies were introduced to stabilise the cost of living, and so prevent inflationary wage movements. The amounts paid out by the Government by way of subsidies


were in the first year, 1940–41, £63 million. In 1945–46 they had risen to £265 million.

Since that time the same policy has been pursued, but the costs, especially of imported foods, have soared upwards. Our own farmers' costs have also increased owing, amongst other things, to better wages for the farm workers and larger profits for the farmers—and the greater part of our subsidies continues to be paid on home products. Thus, the amount required annually to stabilise prices has grown and grown beyond anything that was ever contemplated when that policy was initiated.

In last year's Budget debate I stated that it was our object to prevent subsidies rising, in total, above £400 million. But we had, just at that time, launched a campaign to stabilise wages, prices and profits. It would not have been a very helpful gesture had we just then increased the prices of subsidised foodstuffs, and so it was decided to let the prices remain stable and to let the subsidies rise. As a result, the rate of subsidy has now risen to about £485 million, and it is estimated that, if the present prices are maintained and there is a very moderate increase in supplies, as we hope there may be this year, the total subsidies payable would amount to no less than £568 million, all of which must be found by taxation, on the top of the other prospective increases that I have already mentioned.

Now that just cannot go on. We must call a halt, or else we shall find ourselves in the ridiculous position of having to refuse to import much needed food, because we cannot afford to pay the subsidy out of our Budget. Besides which, prices have got out of all relationship with realities, and the longer that state of affairs persists the more impossible if becomes to bring about an adjustment. We propose, therefore, to put an effective and firm limit on subsidies so that if there is a further rise in cost it will have to be added on to the price.

We must also make immediate provision to prevent the prospective rise in subsidies this year, which would inevitably take place if we were merely to leave prices where they are. As I have pointed out, that prospective increase is of over £80 million. The changes which I propose to make to deal with this situation have already been allowed for in the Estimates actually submitted to Parliament,

so that they will not require any further adjustment. This is the adjustment of which I spoke earlier.

The major part of this adjustment must, of course, be by retail price increase; but about one-third of it can be accomplished by the remission, in the case of tea and sugar of part of the duties now charged on these commodities. That, in reality, is merely a bookkeeping change. The Tea Duty will be reduced by 6d. a lb. all round, and the Sugar Duties by l¼d., with appropriate reductions on molasses and glucose, which are in the same class. Prices, both to the public and to manufacturers, will remain unaltered, and special arrangements will be made to ensure that exporters do not suffer from the reduced rate of Customs drawback. The result will be to reduce the subsidy required to maintain the existing prices by £11 million in respect of tea and £22 million in respect of sugar.

The rest of the adjustment must be by increased prices. It is, of course, immensely difficult to decide what changes in price are least objectionable. Individual views will differ, but, after full consideration, and, of course, after consultation with my right hon. Friend the Minister of Food, I have come to the conclusion that regard should be had to the relationship of the present subsidised price to the pre-war price, with a preference for raising those prices that are low compared to pre-war prices in the light of the general price increase that has taken place; to the actual cost compared with the present price; and to the countries of origin of the particular foods

I propose, therefore, that, as from an early date to be arranged by my right hon. Friend the Minister of Food, the following increases in prices charged retail should be made: cheese, 4d. a lb.; meat, 4d. a lb.; margarine, ld. a lb., and butter, 2d. a lb. Of these, cheese is actually at less than its pre-war price at present, and butter is the same price as pre-war. These changes in price, together with the change in import duties for tea and sugar, will mean that the subsidies should not exceed £465 million in the current year, and whatever happens to prices, we must not allow them to rise above that level.

These changes will cause a rise in the Cost of Living figure on the All-Items Index of rather less than two points. I


am sure the Committee will realise and appreciate that this question of limiting the amount of expenditure on subsidies is a problem of its own, and however much the prospective surplus might be or might not be we should still have to limit the amount to be spent on subsidies.

CHANGES IN TAXATION

I turn now to the changes in taxation which I propose.

Perhaps, I had better deal first with a number of minor changes. Most of them are what I may refer to as "tidying up" proposals, that is, measures which will tidy up and simplify taxation, without any substantial change in yield. I should have liked to be able to tackle the Income Tax Acts, but that is too large a task for the moment. I hope, however, we may get ahead towards their consolidation, which must be the first step in their reform and simplification.

CUSTOMS AND EXCISE DUTIES

I propose then, first, to repeal certain Excise Licence duties, payable by appraisers, auctioneers, house agents and plate dealers. The reason for their imposition has long since ceased to exist; they imply no qualification, as they are issued to anyone who pays the money for them. They cause a considerable amount of work, and their yield is only £150,000 a year. They will disappear after 5th July next.

Some other duties, administered by Customs and Excise, which should be continued are really much more suitable for local administration. These are the licence duties on hawkers, moneylenders, pawnbrokers, and refreshment house keepers. The local authorities have agreed to accept their transfer, and, after some small modifications have been made in the duties, this transfer will be carried through, as from a convenient date, by Treasury Order.

LAND TAX

In the field of Inland Revenue, it is time that the Land Tax of 1692 was got rid of. It has long been redeemable, and 60 per cent. of the tax, which varies from 1d. to 1s. in the £ of annual value, has already been redeemed. What remains yields less than £600,000 a year to the Exchequer, but entails 1,100,000 assessments. I propose, therefore, to

make redemption compulsory when the property first changes hands, on sale or death, after 1st April, 1950. There will be two exceptions. Where the annual charge is less than 10s. which is the case in 700,000 of the assessments, the tax will be abolished outright, at an annual cost of only £74,000 to the Exchequer. I further propose that, if the property charged passes on death but forms part of an estate below the Estate Duty exemption limit of £2,000, the redemption money shall not be chargeable.

STAMP DUTIES

The next field to clear is Stamp Duties. I have made a comprehensive review of these duties, and find that there are a large number of heads of charge which are either entirely obsolete or completely archaic. I propose to repeal all such heads of charge, and also certain other heads, which, though neither archaic nor obsolete, produce little or no revenue. Included under these latter heads are a number of commercial documents—letters of allotment, scrip certificates, proxies, bills of lading, and so on, where the repeal should be a real convenience to the business community. The repeal will also extend to marriage licences, passports, birth, marriage and death certificates, as well as to a number of legal documents, where the yield of duty is small. The repeals will operate—there are about 40 of them in all—from the date when the Finance Bill becomes law, and will cost about £500,000 in the current year.

BONUS ISSUES DUTY

I propose also to repeal the duty on bonus issues of securities, which was imposed by my predecessor in 1947. That duty has, I think, performed the task of controlling bonus issues when the ban was first relaxed, for which purpose it was very properly imposed, and it can now advantageously be discontinued. In future, such issues will be controlled in the same way as any other form of capital issue. The abolition will cost £1,000,000 this year, and will apply to issues made after today.

DEATH DUTIES

The next, and the major, simplification I propose is with regard to Death Duties. There are, as the Committee knows, at present three duties payable upon death;


the Estate Duty, which is charged on property passing on death, at rates graduated according to the total value of the property passing; and the Legacy and Succession Duties, which are charged on the value of the bequests received by beneficiaries, and vary in amount according to the relationship of the beneficiary to the deceased. The two latter duties are complementary; that is, they are charged at the same rates but on different classes of property. All three are separate duties, each with its own complicated legislative code.

This method of imposing three separate taxes on death causes a great deal of unnecessary work, both to the Inland Revenue and to executors. Judged by modern standards of taxation, the Legacy and Succession Duties are most unsatisfactory, in their present form. The rates are unrelated to taxable capacity, but are flat rates, depending on the degree of consanguinity. Thus, a son is charged 2 per cent., a brother 10 per cent., and a more distant relative 20 per cent., regardless of the amount of the benefit received. For instance, an aged aunt, who receives what is, in effect, a charitable legacy of £1,000, pays 20 per cent. tax on it, whereas a son, who inherits £100,000, pays only 2 per cent.

The Legacy and Succession Duties also have the drawback that they impose a proportionately heavier burden on the small than on the large estate. For example, an estate of £6,000, passing wholly to brothers and sisters, pays a total charge of 3 per cent. Estate Duty and 10 per cent. Legacy and Succession Duties, equivalent to a rate of nearly 13 per cent., or 10 per cent over the Estate Duty rate; whereas, at the other extreme, an estate of £3 million would pay only 2½ per cent. over the rate of Estate Duty. It is, no doubt, because of this unequal incidence of the duty that testators, in fact, leave about two-thirds of the total legacies and bequests free of duty, and in all such cases the Legacy and Succession Duties merely become a wholly illogical, extra Estate Duty, falling upon the residue.

The first major reform of the system of Death Duties was brought about by Sir William Harcourt in 1894, when he consolidated the Probate, Inventory, Account and Temporary Estate Duties into a single Estate Duty. This reform

was an important landmark in our fiscal history; I think it is now time to complete, by consolidating the three existing duties into a single Duty. The Legacy and Succession Duties will be repealed outright, and the Exchequer will be compensated by a moderate lift in the scale of the new duty, as compared with the existing Estate Duty.

LLOYD'S UNDERWRITERS (RESERVES)

Then, there is a point, which has long been debated, as to the reserves of Lloyd's underwriters. In connection with a new system which they are introducing of dealing with these, I propose to make certain adjustments. The nature of this particular business makes the underwriter liable to very large and sudden losses, and it is of the utmost importance that sufficient reserves should be built up to meet all possible contingencies. Underwriters are precluded from carrying on business through a company, and the maintenance of this provision is I understand regarded as of importance from the point of view of their international business, which is very large. They are, therefore, in the same position as ordinary individuals, and any money put to reserve has first to pay Surtax as well as Income Tax. As individuals, however, they are also immune from Profits Tax.

Provisions are being made for the setting up of trust funds, to provide reserves available to meet future losses, and the Finance Bill will contain provisions under which contributions to such funds may—within certain limits—be allowed as a deduction in computing the surtax liabilities. Those who join such a scheme will, on the other hand, become chargeable to Profits Tax. The cost of this proposal this year will be negligible; in a full year it will cost about half a million pounds. I regard this as a necessary and desirable adjustment, so as to assure the stability of Lloyd's underwriting, and the foreign exchange income that we derive from it.

NATIONAL INSURANCE BENEFITS

Next, I should mention an adjustment in the taxation on National Insurance benefits and contributions. As the Committee is aware, it was considered a


necessary counterpart of the allowance of relief in respect of the contributions that all benefits of an income nature should be charged to tax. Some of these benefits, however, namely unemployment, sickness and maternity benefits, are purely occasional, and the taxation of these occasional benefits is a great trouble, both to the Inland Revenue and to the recipients, and cannot, of course, be allowed for in P.A.Y.E. tables.
I propose therefore, that in future, unemployment, sickness and maternity benefits should be exempted from tax, but that relief should not be allowed in respect of that part of the contribution relating to these occasional benefits, that is, in the ordinary case, 1s. 7d. out of the 4s. 7d. In other words, the allowable deduction for Income Tax will be 3s. and not 4s. 7d. No difficulty arises as regards other income benefits, such as pensions, and no change is necessary in regard to them.

Effect will be given to the reduced allowance automatically in the P.A.Y.E. tables. To enable this to be done, a new Table A, to be used in conjunction with the existing Table B, will be printed and distributed to employers, in time for use on the first pay day after 11th May. Though, theoretically, this should lead to a reduction of receipts, I hope, in fact, as a result of this change, the Exchequer will be £10 million better off than otherwise it would, since it will be able to collect the tax on contributions whereas it is almost impossible to do so on benefits.

MINING CONCERNS (DEPLETION ALLOWANCES)

There is another matter, arising out of the recommendations of a departmental committee which I set up last autumn, dealing with depletion allowances for United Kingdom mining concerns in respect of capital expenditure on rights to work overseas mineral deposits, including oil deposits. I propose to adopt their recommendations; the scope and method of computation of these new allowances will appear from the Finance Bill. There will be no appreciable cost to the Exchequer this year; next year, the cost may be of the order of £1 million.

ENTERTAINMENTS DUTY (RURAL AREAS)

Another matter of adjustment arises in connection with the exemption from Entertainments Duty for rural areas, which I introduced last year. As I promised, I have kept a close eye on this, to see how it was working out. Difficulties have arisen in marginal cases, and I propose, therefore, while retaining the existing seating limit of 400, to change the population limit from 64 to the square mile to 640 to the square mile. This should meet the great majority of the difficult borderline cases. The change will come into operation on 1st May, and will cost about £100,000 a year.

LIGHT WINES

The receipts from the duties on the cheaper kinds of table wines, those taxed as "light wines imported in cask," have fallen off very sharply in the last few months. I propose to make a substantial reduction in these duties, and I hope that this will, in due course, bring about an increase in consumption, which will not only benefit the Exchequer, but will also assist our trade with France and with the wine-producing countries of the Commonwealth. I propose, therefore, to make a reduction of 12s. a gallon, equivalent to 2s. a bottle, forthwith. I have been able to make an arrangement with the trade whereby there will be some light French wines, in particular, on sale retail in the near future at 8s. a bottle, the present cheapest being about 12s. a bottle. There will be a similar reduction of 12s. a gallon in the Excise duty on wines of corresponding alcoholic strength produced in this country. I cannot extend the scope of this concession to any wines other than those falling within the definition: "Light wines imported in cask." The rates of duty and surcharges on other wines will therefore be adjusted, so that they continue to pay the same amount of duty as at present. If there were no counter-balancing rise in consumption, the initial effect of these reductions would be to reduce the revenue by £1 million a year, but I expect that the eventual loss will be much less than this.

OTHER MINOR CHANGES

I may here mention that I propose to renew the Customs duty of £4 a cwt. on hops, which was introduced in 1925, and


has been extended for successive periods of four years ever since.

There are one or two other minor matters to be included in the Finance Bill. As I announced earlier, it is proposed to define the methods of calculating allowances in respect of plant and machinery, and to make it clear that the Special Contribution extends to Northern Ireland. It is proposed also to simplify the procedure for determining tax appeals by agreement, to correct a technical defect in the double taxation relief provisions, and to safeguard the revenue against avoidance of the ordinary liability to tax on purchased life annuities.

The Committee will be in no doubt, from what I have already said, that there is no room, this year, for any substantial alterations in taxation in a downward direction. The community as a whole will enjoy extra benefits this year in extended social services and defence measures, and cannot, therefore, have them over again in the form of remission of taxation. There seems to be a curious idea abroad in some people's minds that, as a result of last year, I have an available surplus for disposal. That is, of course, a complete fallacy. That money has all been used up for the intended disinflationary purposes. It is only on the basis of the anticipated revenue and expenditure for the coming year that tax alterations can be made. There is indeed, a very good argument for imposing some special charge or tax in connection with the Health Services, both to help to finance them and to bring home to people generally the simple fact that they have to be paid for out of taxation. It is argued, with some force, that this might help to make people more economical in their use of the Services. But, on the whole, I have come to the conclusion that we should await the outcome of another year before taking any such action, and I hope that there will be such economy in the use of the Services as to make it unnecessary.

I stated earlier the objectives that we should have in view, taking into account the general economic and financial situation of our own country and of the world. These objectives were to have an overall surplus balance, and also to have a significant true revenue surplus. We must now consider what further we must

do to achieve those aims, in addition to the measures on the food subsidies, which I have already announced.

FOOTBALL POOLS

I first take another look at the football pools, which seem to have been completely undisturbed by the existing 20 per cent. tax. I do not think they will be any more disturbed if that tax is raised to 30 per cent.; so I propose so to raise it, on and from Saturday, 9th April next. This should bring in £5½ million this year, and £6 million in a full year.

Consideration of other improvements in the Betting Tax must now await the Royal Commission's report upon the general matter of betting and gambling.

MATCHES

Next, I come to matches, where some increase in price is, in any event, necessary to meet the increased costs of production. The last rise in price was in 1940, since when, of course, there has been a very considerable increase in costs. The smallest practicable rise in price is ½d. a box, and this would be a good deal more than is required to cover these increased costs. I propose, therefore, to help and to absorb the difference in tax. The tax will be raised by 5s. 5d. a gross in the case of the ordinary box of 50 matches, with corresponding rates for other containers. That will mean, as I have said, a ½d. rise in the retail cost of the box. Corresponding changes will be made in the tax on lighters of various kinds. These will come into operation from tomorrow, and will produce an extra £4.8 million this year, and £5 million in a full year.

TELEPHONE AND POSTAL SERVICES

I have also come to the conclusion that there should be an increase in the charges for the telephone service. The Committee is aware of the great pressure there has been, and is, upon this service. The Postmaster-General has agreed to assist me by making an increase in charges, which may also help to reduce the pressure of demand. The present surcharge of 15 per cent. on subscribers' local call fees will be increased to 50 per cent., but the free call allowance to residential subscribers will be maintained. Call charges from call offices will, in general, remain as now. The surcharge


on all other items of subscribers' local service, such as rentals for exchange lines and charges for other facilities, will be increased from 15 per cent. to 33⅘ per cent. This will mean that for a residential subscriber in the provinces the annual rental will be increased by 14s. 8d. to £5 6s. 8d. For private wires the present surcharge of 25 per cent. will also be increased to 33⅘ per cent. The increase in call fees will yield, in a full year, £4,250,000, and the other increases £3,850,000.

At the same time, two minor adjustments in Post Office charges will be made. The registration charge for letters and parcels will go up a 1d.; the charge on printed papers for overseas destinations will be increased by ½d. for the first weight step, making the minimum Id. instead of the present ½d. These will produce in a full year, £600,000. The total increases in a full year thus come to £8,700,000. These changes cannot all be brought into operation at once, but I hope that the new surcharge on call fees will take effect from 1st July. The increase on telephone rentals, which will require legislation, cannot be brought into effect before 1st October. The other charges can operate from 1st May. The result of these necessary delays is that the extra receipts this year will only amount to £3,000,000.

PURCHASE TAX

I now turn to rather more important changes. But I should first make it clear that we cannot afford any change at all in the Purchase Tax in this Budget. I recognise that there is a problem about retail stocks, when the time does come for a reduction in the level of the Purchase Tax. I shall do my best, therefore, to work out, during this year, some means for meeting this problem, and thus getting rid of, or at any rate diminishing, whatever hold-up of trade in articles subject to Purchase Tax can be attributed to the financial effect upon traders of changes in the tax.

DEATH DUTIES

Although, as I have stated earlier, there is not much further room for the equalisation of incomes by taxation, there is still a degree of inequality in the ownership of property, which may well be the subject of further adjustment. In

addition, therefore, to the tidying up of the legislative structure of the Death Duties, I am taking this opportunity to raise their total yield by £11 million in 1949–50 and by £20 million in a full year.

For estates up to £17,500, there will be no increase over the existing Estate Duty; they will, therefore, in fact benefit, by no longer being subject to Legacy and Succession Duties. Above that, and up to £35,000, the new scale of Duty will not exceed the average of the three old duties taken together on estates of the same size. Above that, there will be a moderate increase. Tables showing the new rates will be included in the White Paper.

There are two other consequential changes, of a minor character. I propose to substitute for the present concession on agricultural property, which will no longer be applicable, a new relief, which will take the form of an abatement of 45 per cent. of the tax chargeable, which will produce approximately the same result by way of relief. I also propose to lift the exemption limit in the case of out and out gifts inter vivos from £100 to £500. These changes will take effect as from the date of the passing of the Finance Act, so as to give testators the opportunity, if they so wish, to alter their wills.

BEER DUTY

Perhaps this would be a convenient place to mention a remission of taxation, of almost corresponding amount to the increase in Death Duties which I propose to make. There has been some comment on the amount of profit earned by the brewers, but it is difficult for them to make any reduction in the price of beer unless I can help them by a reduction in the duty charged. There has also been a marked falling off, as I have mentioned, in the consumption of beer over the last few months, due partly, no doubt, to the very high duty which has been imposed by successive Budgets. I have, therefore, come to the conclusion that a remission of duty is practicable, and I have been able to arrange with the brewers to reduce the price of all beers by 1d. a pint, on the basis of the duty being reduced by 21s. per bulk barrel of 36 gallons, irrespective of strength. This will cost the Exchequer £18 million this year and £20 million in a full year. An additional sum of £4 million a year,


required to make up the full cost of the concession, will be borne by the brewers. The effect upon the All-Items Cost of Living Index will be to reduce it by about 7/10ths of a point. This change in the duty will operate as from tomorrow.

WEAR AND TEAR ALLOWANCE

During the past year, I have received representations from many quarters as to the difficulty which industrial companies are experiencing in financing the cost of replacement of old machinery, or of the installation of new machinery, on the existing scale of allowance for wear and tear. We are constantly stressing the need for higher productivity, and both sides of industry agree that one important factor in this is more and better mechanisation. In the Income Tax Act, 1945, assistance for this purpose was introduced, by giving an initial allowance for wear and tear of 20 per cent. of the new cost. All plant and machinery, of course, receives in wear and tear allowance, 100 per cent. of its cost over the agreed life of the plant, so that the initial allowance of 20 per cent. makes no difference to the total result in the long-run. But the immediate result is important, for early relief in Income Tax and Profits Tax on the larger sum is afforded, and thus more money becomes available for re-equipment at an earlier date. Owing to the further rise in prices, it is now urged that this help is not enough, and current depreciation allowances on machinery, bought at prices much lower than those now ruling, are not sufficient to allow replacement at existing prices.

I have therefore decided to double the existing initial allowance in respect of plant and machinery purchased on or after 6th April, 1949, making it 40 per cent. of the new cost. Relief in this form guarantees that it will be used exclusively for the purpose intended, for it is obtained only when the new machinery and plant is actually bought. Although the cost in the coming year will be negligible, the importance to industry of this strengthening of their power to re-equip can be seen from the fact that, in 1950–51 the cost will be £40 million and in 1951–52 £75 million. The cost to the Exchequer will, of course, be less in later years, when a smaller percentage allowance will fall to be made owing to the larger percentage already granted.

TAX INCIDENCE ON INDUSTRY (INQUIRY)

The whole question of calculating profits in a way which can take care of marked changes in price formed part of representations made to me by the Federation of British Industries. The proposal I have just described will, I hope, go far to meet the immediate needs of industry. But there is a number of other issues, arising out of the present structure of taxation, including the incidence of tax and its effects on risk bearing, which I think, requires further examination. We must, of course, continue to look to industry, broadly speaking, for the same total contribution to the National Revenue as at present; but, within this limitation, it may well be that the present arrangements could be modified, to enable the burden to be more easily borne.

An inquiry covering the whole subject would be a very extensive undertaking indeed, and I propose, therefore, to make a start by taking the technical issues which arise in connection with the computation of taxable profits. A number of such issues, of importance to industry, has been raised both with my predecessors and with myself, and I think it would be convenient if, as a first step, these technical matters were examined by a small independent committee, whose terms of reference, in effect, would be to inquire into the method of computing trade profits, for the purpose of charging them to Income Tax and Profits Tax, and into the question of the basis period to be taken in assessing the tax on the profits so ascertained.

I propose therefore to set up such a committee accordingly. It will not be part of this committee's functions to inquire into the general question of the incidence of tax upon industry, but its work will clear the ground for the comprehensive inquiry which, as I have indicated, I hope to set on foot at a later stage. The inquiry of the committee which I am now proposing to set up will necessarily take some time, and its results will not be available for consideration in connection with this year's Finance Bill.

SUMMARY

I can now turn to the summary of the financial results for which I have planned, by the various changes that I


have indicated. Overall there is just a balance, with a small surplus of £14 million for the year, after meeting all Government expenditure, capital and revenue. On the conventional Budget basis the surplus would be £470 million; but on the true revenue basis it shows a disinflationary contribution of some £492 million, which can, I think, be regarded as satisfactory to continue with our purpose. I very much wish that the facts of the situation had enabled me to present a more attractive picture to the Committee and the country. But we have to face our economic and financial problems with realism, and must not allow ourselves to be carried away by the quite understandable desire to court electoral popularity. Nor must we jeopardise our hopes of recovery and prosperity over the long-term by a too hasty desire to anticipate the benefits of what we have already accomplished.

We have chosen, quite deliberately—and in this all parties have participated—to have our benefits in the form of extended social services, extended on the widest scale, and bringing untold benefits to the people by way of increased comfort and easement of their conditions. This has been accomplished partly by increased production, and partly by a redistribution of our national wealth; and we must face up to the consequences of this deliberate choice. Each year, and year after year, we must provide, out of taxation, the money required for these services and for our defence; while, at the same time, we must maintain our overseas trade, invest sufficient moneys to restore and enlarge our capital equipment, both social and industrial, and provide ourselves with the best possible supply of consumption goods.

We are thus faced with a choice as to how we should distribute the national product. There are many who suggest that we should allow the individual, the wage-earner, the salary earner, and the profit earner, more to spend for himself by reducing the charge upon him by way of taxation. But that can only be done at the expense of our social services or of our defence. The need, in the existing circumstances, for an adequate defence cannot be doubted, and we are therefore thrown back upon the question of how much we should spend upon the social

services. It has always been the policy of the Labour Party to expand the social services, as the best and most certain means of redistributing the national wealth, and it is unthinkable that we should go back upon that policy. Nor must those who support it allow themselves to be drawn into demanding remissions of taxation, if those remissions leave an inadequate sum available to provide the social services to which we are all so fully pledged.

From a financial point of view, this means a large Budget, and high taxation. From an economic point of view, it means that we must create an ever greater national wealth, so that the individual load of taxation may be diminished in proportion as our national wealth grows. We must, therefore, regulate the speed of the development of our social services by the rate at which we can increase our national wealth. It is by a better organised productive effort that we shall provide ourselves with the means to meet and discharge these new social obligations, which we have willingly assumed as a community, not temporarily, but for all time.

We thus enter upon the fifth post-war financial year with tremendous achievements to our credit; for not only have we, as a result of the policies adopted, travelled a long way on the road to economic recovery, but we have, in addition, carried through, and paid and provided for, the greatest programme of social services ever undertaken in any country in so short a period of time, while at the same time surpassing all previous records for exports and for capital investment at home. A people with that record need have no doubts as to their capacity to meet and overcome the many difficulties which must still be faced. We have proved that the wise and progressive policies of democratic socialism can do more for the workers and for the country than any alternative which offers. This Budget is designed to carry on with those policies, and to consolidate the economic gains that we have won; and it is in that spirit that I ask the Committee to give it their support.

The Chairman: It is now my duty to propose the necessary Resolutions to the Committee. For the convenience of hon. Members I have arranged for copies to


be handed round, and with the agreement of the Committee I propose to put the Resolutions summarily, as has been the recent practice.

CUSTOMS AND EXCISE

1. Tea (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the duties of customs heretofore chargeable on tea imported into the United Kingdom shall cease to be chargeable, but in lieu thereof there shall, in the case of tea imported into the United Kingdom and not being an Empire product within the meaning of subsection (1) of section eight of the Finance Act, 1919, as amended by any subsequent enactment, be charged a duty of customs at the rate of two-pence the pound; and the enactments relating to the allowances of drawback in respect of blended tea prepared from teas on which customs duties have been paid shall extend to blended tea prepared wholly or partly from tea in respect of which the duty chargeable under this Resolution has been paid.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

2. Beer (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the rates of the duty of excise charged on beer under section one of the Finance (No. 2) Act, 1939, and of the excise drawback allowed in respect of beer under that section shall be amended by subtracting twenty-one shillings from each of the rates specified in the Second Schedule to the Finance Act, 1948, except any rate so specified for additional degrees of specific gravity in excess of 1,027 degrees:
Provided that this Resolution shall not apply to reduce any drawback in respect of beer as to which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rate in force before the said seventh day of April.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

3. Beer (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the rates of the duties of customs charged on beer under section one of the Finance (No. 2) Act, 1939, and of the customs drawbacks allowed in respect of beer under that section shall be amended by subtracting twenty-one shillings from each of the rates specified in the Second Schedule to the Finance Act, 1948, except any rate so specified for additional degrees of specific gravity in excess of 1,027 degrees:

Provided that this Resolution shall not apply to reduce any drawback in respect of beer as to which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rate in force before the said seventh day of April.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

4. Continuation of customs duty on Hops, etc., and additional customs duty on Beer

Resolved:
That the period for which the following duties of customs are chargeable (which expires on the fifteenth day of August, nineteen hundred and forty-nine) shall be extended by four years, namely:—

(a) the duties now chargeable by virtue of subsection (1) of section one of the Finance Act, 1945, on hops, hop oil and extracts, essences or other similar preparations made from hops; and
(b) the additional duty now chargeable in respect of beer by virtue of that subsection."

5. Wines (Customs)

Resolved:
That—
(a) as from the seventh day of April, nineteen hundred and forty-nine, in lieu of the duties of customs theretofore chargeable on wines, there shall (subject to paragraph (b) hereof) be charged on wines imported into the United Kingdom duties of customs at the rates set out in the following Table, the rates specified in the second column thereof applying to wines which are not Empire products, and those specified in the third column thereof to wines which are;

TABLE


Description of wine
Rate of duty per gallon



Non-Empire product
Empire product



£
s.
d.
£
s.
d.


Light wines:—








Still—








not in bottle at

13
0

11
0


in bottle at
1
7
6
1
4
6


Sparkling at
1
17
6
1
15
6


Other wines:—








Still—








not in bottle at
2
10
0
2
0
0


in bottle at
2
12
6
2
1
6


Sparkling at
3
2
6
2
12
6


together, in the case of wine exceeding 42 degrees proof spirit, with an additional duty for each degree or fraction of a degree of the excess at

4
2

3
4

(b) if at any time the Treasury are satisfied that an increase of a shilling in each of the rates specified in the above Table for light wines which are Empire products would not contravene any of the Ottawa agreements for the time being in force, they shall by order increase those rates by a shilling, but shall revoke the order on being satisfied at any time that the increase does contravene one of those agreements; and those rates shall also be increased by a shilling in the case of light wines produced or manufactured in a country the Government of which is a party to one of the Ottawa agreements at any time when that agreement is not in force;

(c) in this Resolution the expression "Empire product" has the same meaning as in subsection (1) of section eight of the Finance Act, 1919, as amended by any subsequent enactment, the expression, "light wine" means wine not exceeding 25 degrees or, in the case of wine being an Empire product, 27 degrees of proof spirit, the expression "Ottawa agreement" means an agreement scheduled to the Ottawa Agreements Act, 1932, as for the time being varied by mutual consent, and the expression "wine" includes the lees of wine.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

6. Sweets (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the duty of excise on sweets charged under section six of the Finance Act, 1927, shall be charged at the rates set out in the following Table:—

Description of sweets
Rate of duty per gallon



£
s.
d.


Not exceeding 27 degrees proof sprit—





Still at

10
6


Sparkling at
1
8
6


Exceeding 27 degrees proof spirit—





Still at
1
10
6


Sparkling at
1
16
6

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

7. Sugar, etc. (Customs)

Resolved:
That, as from five o'clock in the evening of the sixth day of April, nineteen hundred and forty-nine, the following provisions shall have effect with respect to the duties of customs on sugar, molasses and glucose:—

(a) Subject to paragraph (b) hereof, the rates of duty and of the preferential reduction for goods which are Empire

products within the meaning of subsection (1) of section eight of the Finance Act, 1919, as amended by any subsequent enactment, shall be the rates directed by section four of the Finance Act, 1928, and for the purposes of section seven of the Finance Act, 1926 (which provides for stabilising imperial preference as at the first day of July, nineteen hundred and twenty-six), those rates shall be deemed to have been in force immediately before that day;
(b) The rates of duty for certificated colonial sugar (that is to say sugar to which proviso (a) of subsection (1) of section one of the Finance Act, 1934, applies) shall be those directed by that proviso, and any certificate issued under that section, whether before or after the passing of this Resolution, shall have effect accordingly;
(c) Except in the case of goods as to which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rates theretofore in force, the rates of any drawback of duty under section four of the said Act of 1928 shall be the rates directed by that section as amended (in relation to certificated colonial sugar) by proviso (b) to subsection (1) of section one of the said Act of 1934.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

8. Sugar, etc. (Excise)

Resolved:
That, as from five o'clock in the evening of the sixth day of April, nineteen hundred and forty-nine, the following provisions shall have effect with respect to the duties of excise on sugar, molasses and glucose:—

(a) The rates of duty shall be those directed by section three of the Finance Act, 1932;
(b) Except in the case of goods as to which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rate theretofore in force, the rates of any drawback of duty under section four of the Finance Act, 1928, shall be the rates directed by section four of the Finance Act, 1932.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

9. Matches (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, there shall be charged on matches, in lieu of the duties


of customs theretofore chargeable thereon, the following duties of customs, that is to say:—

£
s.
d.


For every 1,000 containers in which there are not more than 10 matches
0
19
11


For every 1,000 containers in which there are more than 10 matches, but not more than 20 matches
1
19
10


For every 1,000 containers in which there are more than 20 matches, but not more than 30 matches
2
19
9


For every 144 containers in which there are more than 30 matches, but not more than 50 matches
0
14
5


For every 144 containers in which there are more than 50 matches:—





For the first 50 matches
0
14
5


For every additional 5 matches or part of 5 matches in excess of 50 matches
0
1
5½

and so in proportion for any less number of containers.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

10. Matches (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, there shall be charged on matches, in lieu of the duties of excise theretofore charegable thereon, the following duties of excise, that is to say:—

£
s.
d.


For every 1,000 containers in which there are not more than 10 matches
0
19
2


For every 1,000 containers in which there are more than 10 matches, but not more than 20 matches
1
18
4


For every 1,000 containers in which there are more than 20 matches, but not more than 30 matches
2
17
6


For every 144 containers in which there are more than 30 matches, but not more than 50 matches
0
13
9


For every 144 containers in which there are more than 50 matches:—





For the first 50 matches
0
13
9


For every additional 5 matches or part of 5 matches in excess of 50 matches
0
1
4½

and so in proportion for any less number of containers.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

11. Mechanical Lighters (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the duty of customs charged under section six of the Finance Act, 1928, on the importation into the United Kingdom of any mechanical lighter

and of any component part of a mechanical lighter other than a flint shall be charged at the rate of seven shillings or, in the case of a lighter or part shown to the satisfaction of the Commissioners of Customs and Excise to be constructed solely for the purpose of igniting gas for domestic use, at the rate of five shillings.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

12. Mechanical Lighters (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-nine, the duty of excise charged under section six of the Finance Act, 1928, on every mechanical lighter manufactured in the United Kingdom which is complete, or which could be made complete by the addition of a flint, and on every mechanical lighter sent out in an incomplete state from the premises of a manufacturer of mechanical lighters, shall be charged at the rate of six shillings or, in the case of a lighter shown to the satisfaction of the Commissioners of Customs and Excise to be constructed solely for the purpose of igniting gas for domestic use, at the rate of four shillings.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

13. Entertainments Duty (Extension of relief for rural entertainments)

Resolved:
That, as respects payments for admission to entertainments held on or after the first day of May, nineteen hundred and forty-nine, the exemption from entertainments duty conferred by section seventeen of the Finance Act, 1948, shall he extended by the substitution in subsection (1) of that section for the words 'a population not exceeding sixty-four to the square mile' of the words 'a population not exceeding six hundred and forty to the square mile.'
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

14. Increase in Pool Betting Duty

Resolved:
That the amount of the pool betting duty on any bet made (whether before or after the passing of this Resolution) by reference to an event taking place on or after the ninth day of April, nineteen hundred and forty-nine, shall be half as much again as if this Resolution had not been passed, except in the case of a bet exempted under section fourteen of the Finance Act, 1948, from the increase under that section as being made by means of a totalisator set up on a dog racecourse.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

15. Excise licences for appraisers, auctioneers, house agents and plate dealers

Resolved:
That excise licences for appraisers, auctioneers, house agents and dealers in plate, and the duties thereon, be abolished as respects any period after the fifth day of July, nineteen hundred and forty-nine.

16. Excise licences for hawkers, moneylenders, pawnbrokers and refreshment houses

Resolved:
That the power to levy the duties on excise licences for hawkers, moneylenders, pawnbrokers and refreshment houses shall be transferred to local authorities, and that the annual duty on a licence to keep a refreshment house shall, as from the transfer, be one pound and one shilling in all cases.

INCOME TAX

17. Charge of Income Tax

Resolved:
That

(a) income tax for the year 1949–50 shall be charged at the standard rate of nine shillings in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;
(b) subject to the provisions of any Act of the present Session relating to War Damage or Superannuation, and to any enactment which has effect only after the end of the year 1948–49, all such enactments as had effect with respect to the income tax charged for that year, other than enactments which by their terms relate only to tax for that year, shall have effect with respect to the income tax charged for the year 1949–50.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

18. Higher Rates of Income Tax for 1948–49

Resolved:
That income tax for the year 1948–49 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess over two thousand pounds as were charged for the year 1947–48.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

19. Insurance Benefit, etc.

Resolved:
That—

(a) subsection (2) of section twenty-seven of the Finance Act, 1946, shall not apply to unemployment benefit, sickness benefit or maternity benefit;
(b) relief under subsection (1) of that section shall not, in the case of a contribution other than an employer's contribution, be given in respect of so much of the contribution as is referable to unemployment benefit, sickness benefit or maternity benefit;
(c) the payments which, under the said subsection (2), are to be charged to income tax under Schedule E shall be deemed for all the purposes of the Income Tax Acts (and in particular for the purposes of the Income Tax (Employments) Act, 1943) to be emoluments chargeable under that Schedule.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

20. Borrowing against certain Life Policies

Resolved:
That—

(1) where—

(a) under any contract or arrangements, whether made before or after the passing of this Resolution, provision is made for the making to any person, at intervals until the happening of an event or contingency dependent on human life, of payments by way of loan; and
(b) under the contract or arrangements, the loans are secured upon a policy of life assurance which assures moneys payable on the happening of such an event or contingency and need not be repaid until the policy moneys become payable; and
(c) the amount of the moneys payable on the happening of the event or contingency is made by the policy to increase by reference to the length of a period ending on the happening thereof,
the payments by way of loan shall be treated for all the purposes of the Income Tax Acts as annual payments falling within Case III of Schedule D, or, if they are made to a person residing in the United Kingdom and the contract or arrangements were


made outside the United Kingdom, as income from a possession out of the United Kingdom falling within Rule 1 of Case V of Schedule D;

(2) the amount of the moneys payable under a policy of life assurance shall not be deemed for the purposes of this Resolution to be made to increase by reference to the length of a period ending on the happening of an event or contingency dependent on human life by reason only that those moneys are to increase from time to time if profits are made by the persons liable under the policy.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

21. Allowances in respect of Machinery or Plant

Resolved:
That it is expedient to authorise such increases in the income tax payable by any person for any year of assessment not earlier than the year 1947–48 as may result from amendments of the law relating to allowances or deductions, or charges, in respect of machinery or plant.

22. Underwriters' Reserves

Resolved:
That it is expedient to make provision as to the consequences for income tax purposes of transfers into and out of special reserve funds constituted in relation to underwriting members of Lloyd's and of certain other associations in accordance with arrangements approved by the Commissioners of Inland Revenue.

23. Double Taxation Relief

Resolved:
That subsection (4) of section fifty-two of the Finance (No. 2) Act, 1945 (which requires any balance of income tax deducted from annual payments payable out of dividends affected by double taxation relief to be assessed under Rule 21 of the General Rules and paid over to the Crown) shall have effect and be deemed always to have had effect as if, at the end of that subsection, there were added the following proviso—
provided that section nineteen of the Finance Act, 1928 (which enables the amount of an assessment under the said Rule 21 to be allowed in certain cases as a loss for certain purposes) shall not apply for the year 1949–50 or any subsequent year of assessment to any assessment made under the said Rule 21 by virtue of this subsection.'

ESTATE DUTY

24. Rates

Resolved:
That the scale set out in the following Table shall be substituted for the scale set out

in Part 1 of the Tenth Schedule to the Finance Act, 1946, as the scale of rates of estate duty, and the scale in accordance with which estate duty is to be charged on the agricultural value of agricultural property under section twenty-three of the Finance Act, 1925, shall (instead of being that referred to in that section) be the same scale as applies in other cases with a reduction of forty-five per cent. in each of the rates.

TABLE


Principal value of estate


Rate percent of duty


£

£




Not exceeding
2000
Nil


Exceeding—





2,000
and not exceeding
3,000
1


3,000
and not exceeding
5,000
2


5,000
and not exceeding
7,500
3


7,500
and not exceeding
10,000
4


10,000
and not exceeding
12,500
6


12,500
and not exceeding
15,000
8


15,000
and not exceeding
17,500
10


17,500
and not exceeding
20,000
12


20,000
and not exceeding
25,000
15


25,000
and not exceeding
30,000
18


30,000
and not exceeding
35,000
21


35,000
and not exceeding
40,000
24


40,000
and not exceeding
45,000
28


45,000
and not exceeding
50,000
31


50,000
and not exceeding
60,000
35


60,00
and not exceeding
75,000
40


75,000
and not exceeding
100,000
45


100,000
and not exceeding
150,000
50


150,000
and not exceeding
200,000
55


200,000
and not exceeding
300,000
60


300,000
and not exceeding
500,000
65


500,000
and not exceeding
750,000
70


750,000
and not exceeding
1,000,000
75


1000,000
…
…
80"

25. Property abroad

Resolved:
That property situate out of great Britain which passes on a death shall be chargeable with estate duty unless it is shown that the proper law regulating the devolution of the property or the disposition under or by reason of which it passes is the law neither of England nor of Scotland and that any other condition required by any Act of the present Session relating to Finance is satisfied.

26. Property settled inalienably

Resolved:
That lands and chattels so settled by Act of Parliament or royal grant that no one of the persons successively in possession thereof is capable of alienating the same shall be chargeable with estate duty in the same way as other settled property.

LAND TAX

27. Rates and redemption

Resolved:
That—

(a) the amount fixed as that of the land tax attributable to any property for the year ending on the twenty-fourth day


of March, nineteen hundred and forty-nine, shall (subject to any provision for apportionment) be the amount chargeable in respect of the property for any subsequent year;
(b) land tax shall be compulsorily redeemable at such times and by such persons as may be provided by any Act of the present Session relating to Finance;
(c) the capital sum to be paid for the redemption (whether compulsory or not) of the land tax on any property shall (subject to any provision for apportionment) be twenty-five times the amount of the tax for the time being chargeable in respect of the property."

MISCELLANEOUS

28. The Profits Tax

Resolved:
That the extent and incidence of the profits tax for past, current and future chargeable accounting periods shall be varied so as to give effect to provisions amending the law applicable to income tax allowances or deductions, or charges, in respect of machinery or plant, and to provisions as to the liability to the profits tax of persons, being underwriting members of Lloyd's or of certain other associations, who elect to take advantage of arrangements approved by the Commissioners of Inland Revenue as to special reserve funds.

29. The Special Contribution

Resolved:
That Part V of the Finance Act, 1948, shall extend, and be deemed always to have extended, to Northern Ireland.

30. Settlement of Appeals and Claims

Resolved:
That any agreement, whether made before or after the passing of this Resolution, as to the way in which an appeal against an assessment to, or determination with respect to, income tax other than surtax, surtax, the profits tax, excess profits tax or the special contribution, or as to the way in which a claim for relief from excess profits tax, ought to be dealt with, and any withdrawal of any such appeal or claim, shall operate in the same way as a determination to the same effect by the Commissioners or other body having jurisdiction to hear the appeal or determine the claim.

31. Amendment of Law

Motion made, and Question proposed:
That it is expedient to amend the law with respect to the National Debt and the public revenue (other than purchase tax), and to make further provision in connection with finance."—[Sir S. Cripps.]

5.50 p.m.

Mr. Eden: After such a comprehensive and, indeed, masterly survey, not only of our national finances, but of almost every branch of

our national life, the choice that falls to the Opposition speaker who follows the Chancellor is either to try to pursue him, heading by heading, through two and a half hours of condensed and brilliant oratory, or to content himself with brief comments on the manner of the performance while leaving the matter to later gestation. I at once reassure the Committee by saying that the latter course is the one which I propose to pursue. I do so with the greater pleasure because no one could have listened to the Chancellor's performance today without rating it as among the very best put up by any of the Chancellors to whom we have listened.
I think that the manner in which the right hon. and learned Gentleman conducted us through all he had to tell us, the manner in which he gave us an occasional symptom of encouragement, salted with the rebuke which, no doubt, our national resurgence occasionally requires, was extremely able. There were one or two occasions when I felt almost a little sympathy for one with Gladstonian Liberal instincts, wrestling with the legacy of Socialist finance, but still, the right hon. and learned Gentleman contrived even that marriage with a great measure of success, and I am sure that the whole Committee, irrespective of party, will congratulate him on a speech of really outstanding brilliance, even for him. When we come to criticise, as we shall, the contents of that speech, we shall do so with the recollection of a performance for which we are all grateful.

5.52 p.m.

Mr. Ronald Chamberlain: Like the Deputy Leader of the Opposition, I wish to add my congratulations to the Chancellor of the Exchequer on an outstanding performance. If this were the occasion merely to consider the Budget Resolutions one would, of course, have to give them much study and, naturally, would not speak at length after my right hon. and learned Friend's Budget speech. But this occasion is something more than that. It is, after all, an economic survey and we are, therefore, entitled, if we are fortunate enough to catch your eye. Major Milner, to give some consideration to the general background which the Chancellor sketched out and deployed so very skilfully today.
I should like to congratulate my right hon. and learned Friend on his very great achievements during the past year. I do so perhaps the more sincerely because, in certain respects, I must make criticisms which I think have got to be made. However, I hope I can look at the whole matter generously enough to say that we all appreciate not only his skill but also the excellent manner in which he has piloted the country through a most difficult period, especially as regards capital investment, imports and exports, and the dollar deficit—the most intractable question of all. At the same time, some of us feel that the steps which ought to have been taken, even in these austere times, to deal with many things we have fought and worked for for so many years, have not been taken. I appreciate that a Government, even a Socialist Government, cannot turn the helm in the direction of Socialism immediately. It is a slow process; the effort must be made by easy stages. Nevertheless, I think it is right to call attention to some grave abuses in our economic and national system, and to certain grave inequalities.
There has been a call for austerity, hard work and longer hours of labour, and the balance must be watched very carefully in making these appeals, particularly when they are answered, as they have been by our working people, so effectively and wholeheartedly. Many requests for some alleviation of austerity have been refused. Recently, old age pensioners were refused a further pensions increase—I will not argue that now; there may have been justification for it—but, still, there was a refusal. Insistent requests have also been made for equal pay for equal work as between men and women. These, too, have been refused. On the other side of the picture, we see a considerable increase in the salaries of higher civil servants, which leaves many wondering whether the balance is being held evenly.
I must call attention to the fact that the White Paper on Personal Incomes, Costs and Prices, issued a year ago, when the Chancellor called for all-round sacrifices, said this:
There is no justification at the present time for any rise in incomes from profits, rents, or other like sources.
I recall that at that time the Chancellor

asked the Federation of British Industries and associated organisations not only to show general restraint, but also for a definite plan for price and profit decreases. That call was made in a letter which my right hon. and learned Friend sent to the Chairman of the Federation. The request was entirely ignored and bypassed. Certainly, there were small price reductions but there was no general scheme for price decreases. Still less was there any scheme or plan for profit decreases. Both were side-tracked, and all that the Federation offered—and it was a hollow offer—was some kind of ceiling on dividends. But even that very poor, trivial offer does not seem to have been adhered to by industrial and financial interests because we find, on page 34 of the Economic Survey, that gross dividends distributed have increased by no less a sum than £25 million.
Further, in recent correspondence with the Chancellor, the Federation and associated organisations say, quite clearly, that they can no longer be held to a policy of a ceiling on dividends. Instead, they suggest what they call a policy of restraint and moderation. What that means is very obscure to me. It is something less than the very trivial and meaningless ceiling on dividends. That was very trivial, because we all know that dividends have been and are running at incredibly high levels, and when the Federation of British Industries and associated organisations tell us that they can no longer abide by that so-called restraint, and that now they offer nothing more to the Chancellor of the Exchequer than a policy of restraint and moderation, one wonders what it is likely to amount to. It will amount to very little indeed, as anyone who has studied the history of this matter during the last 12 months must agree.
Entirely by-passed and ignored was the request by the Chancellor of the Exchequer to the Federation of British Industries and associated organisations for a scheme of decreased profits, as distinct from dividends. We find in the year 1948 that the trading profits of companies went up by no less than £246 million. In 1947 the gross company trading profits were £1,393 million, and in the year just ended they went up to no less than £1,639 million, a very considerable increase even in these days when we think in terms of


millions. I stress that because I recall that a general all-round forbearance, moderation and restraint has been asked for, and largely accepted by the working classes. I call the attention of the House to this tremendous increase of the trading profits of the last year as compared with the previous year. It is no less than three times the amount that the gross trading profits were in 1938. Details of that will be found in table 4 on page 8 of the White Paper on National Income and Expenditure.
Lest anyone should take pains to compare that with the amount of increased wages, I would call attention to the fact that whereas this increase in gross profits of companies has gone up by 17 per cent. wages have increased by only 12½ per cent.—an increase very largely justified and accepted by the Chancellor of the Exchequer. Included in the increase in wages in the year 1948, compared with 1947, is the element of the greater number of workers engaged in industry. It is not solely an increase in the basic rates or in the actual wages received.
Another matter on which I feel strongly, and which I should like to mention now is the matter of company reconstruction. For quite a long time I have been considering this matter and bringing it before both the nation and the Chancellor of the Exchequer. I have had some correspondence with him about it. The reason I feel very strongly about this is that it is widespread and is being extensively used and abused, and is something which is extremely unhealthy and detrimental to our national economy. In spite of all the progress made, about which we have heard today and which the Chancellor rightly referred to, there is still a grave gap and a very grave danger. The Chancellor of the Exchequer took great pains to stress the fact that we were by no means out of the wood.
Company reconstructions are entirely wrong and pernicious, because there is a tremendous increase of share capital without any increase or benefit in the way of actual capital. It is one thing to float a new issue on the market, which is entirely justified when there is development of a concern, but it is an entirely different matter to reconstruct a company and to issue a greatly increased number of shares which are handed out to the existing shareholders. The usual

procedure is for them to sell for their personal benefit a proportion of these newly inscribed shares. There is no benefit whatever to the company, and, on the other hand, it has an entirely detrimental effect, because it inflates the financial structure and tends to send up and keep up prices.
I cannot understand why in case after case the Capital Issues Committee have agreed to these company reconstructions. I am not going into the details, though I could if any Member of the Committee questions it, but I can summarise what has happened in 100 cases, which I examined in the year 1948. I appreciate that they have got to be flourishing companies before they can go through this process, but there are very few companies, as far as I can ascertain, which are not partially or fully flourishing. Certainly those of which I have got details are very flourishing, and they cover practically every form of manufacture and industry. Profits which just before the war were slightly over £3 million have increased to well over £16 million in 1947–48. In other words the profits have gone up five times. I mention that to show, first, that they are very flourishing companies and, second, that there has been no particular restraint or diminution in their profits.
The nominal capital of these companies before the recent reconstruction was £15½ million. After reconstruction the market value of the new share issue went up from £15½ million to no less than £97 million. Here is the particular point I want to make—the shareholders received in cash £31 million for a portion of these newly inscribed shares, which they have received because of the reconstruction of the company, with a new company taking over the old.
Is it a good, sound and healthy thing that between them these individuals should net over £31 million in cash, which is tax-free because it is a form of capital appreciation? This does not go through the Treasury records or machinery. I consider it a thoroughly unhealthy state of affairs that these transactions should be sanctioned by the Capital Issues Committee and that these huge sums of money should accrue to the fortunate shareholders of the reconstructed companies without being subject to tax. It might be argued that this is only a transfer of money from one set of pockets to another. That may be so.


That is not my main argument against these reconstructions. Nevertheless it is a minor argument of some weight that these individuals should be able to corner this amount of cash entirely tax-free, and that this process should be going on every day. One has only to look at the "Financial Times" or the financial colums of "The Times" to see that it is going on continually and, as far as I can see, increasingly.
Of those 800 or 900 shareholders, 600 still hold shares which will bring in dividends of £3,700,000 a year. When I said that they had marketed shares to bring them in this tax-free sum of £31 million, I hope I made it clear that they were not selling all their holdings. By no means. The usual practice is to put on the market at inflated values a portion of the holding, but still to hold a proportion of these newly-inscribed shares, which are, of course, extremely valuable. I could give instances where the expectation of dividend is 25, 40, 50 per cent. and more. It illustrates the unhealthy state of affairs when a greatly increased and inflated holding of shares can still be expected to produce the same dividends. That is what is happening in case after case. That can mean only two things, an inflated financial structure—a thoroughly unhealthy thing which may come crashing down at any time—and inflated prices. I noted that in these 100 cases there is very liberal directors' remuneration of £1,250,000 a year, and the issuing houses and the underwriters also come in for very large sums over these transactions, as might be expected. In the 100 cases the issuing houses come in for something like £800,000 and the underwriters £845,000.
I appeal to the Economic Secretary, as I have appealed to the Chancellor without avail, to do something about this pernicious, wrong, unequal system. Many of us have been working in the Labour Party and for Socialism for many years and we know that we cannot achieve our aim overnight; but we ought to be moving towards the basic rule that individuals can take out of the common pool only what they put in, and no more. Perhaps we are slowly and painfully moving in that direction, but when we get practices of this kind, and the resultant wealth and luxury through individuals netting as much as £1 million

tax-free over these company reconstructions, we see that we are still a long way from the ideal that no one should take out of the common pool of the community unless he puts in an equal amount.
It is not the middle classes any more than the workers against whom we are inveighing in relation to this system. Doctors, accountants and other professional men put into the pool just as much as they take out, and many of them and many workers put into the pool more than they take out. However, on the other side of the picture we get this vicious state of affairs of a small minority drawing off from the pool of goods and services far more than they contribute. One cannot blame them if the system is allowed. This system of company conversions is allowed, I regret to say, by the Capital Issues Committee. There is also the whole set-up of the City and the City interests which are largely there to facilitate this kind of process.
While I again congratulate the Chancellor of the Exchequer on his masterly performance this afternoon and the great services which he has rendered in so many directions while Chancellor of the Exchequer, I appeal to him, through the Economic Secretary, to look at the whole structure of profits and dividends and, above all, at this pernicious and wrong system of company reconstruction.

6.17 p.m.

Mr. Edgar Granville: I am sure we all congratulate the Chancellor on the sustained effort and the clarity with which he introduced his financial and economic survey. I thought that he resembled the "Iron Chancellor" when I saw him standing at the Despatch Box resisting the pressure from the left and from the right. On an occasion like this, we always feel admiration for the able Treasury and Revenue officials who labour on this massive annual balance sheet and the great work which they put in to enable this to be put before the House of Commons and the nation by the Chancellor. The country owes a great debt of gratitude to the high standard of these able officials of the Treasury and the Revenue.
This is certainly no Election Budget. Last week the official Opposition were concerned at the date of the Budget. They seemed to think there might be a connection between today's date and tomorrow's


elections. This is no pre-election Budget and it is certainly no municipal election Budget. I have no doubt that the Chancellor of the Exchequer will raise no wild joy over the B.B.C. tonight when he explains his proposals. It is clear that he will leave to the Minister of Fuel and Power the extent to which we can get "lit up" and to the President of the Board of Trade the setting of the people free.
This is another Budget of taxation and tears, in 10 years of austerity. The Chancellor had a choice. He could have introduced a Liberal expansionist policy which would have meant more and cheaper goods available in the shops, which would have meant more money to spend as an incentive, which would have meant more vital production in relation to the 360 million dollar annual deficit and which would certainly have meant more competitive exports, and, in turn, more Income Tax rebates and reductions; in other words, a healthier and happier economy. The alternative is this restrictionist or disinflation policy which is dull and exacting, and is turning us all into an unenterprising mass, psychologically and nationally, of people who do not try any more and forget to smile any more. The Chancellor has continued his rake's progress on his disinflation policy. He has resisted any reduction in the Purchase Tax, and this Budget will certainly not break the shopping strike—this will be no election policy—when the shops are full of goods which, unfortunately, are not only too dear but too dull in their design.
Listening to the right hon. and learned Gentleman's important Economic Survey—upon which the life of this nation in 1952 depends—I questioned whether this was the Budget to assist the export trade in the currency and cancellation dollar crisis which this country and other countries as well will have to face. I do not think this Budget will assist the export trades to make the tremendous effort for which the Chancellor has appealed, to capture the most difficult export market in the world, where competition is more intense than anywhere else, the North American market. The coming recession or shakeup or the climacteric of collectivism, in my view, will make a hash of many of the proposals in this Budget. The Chan-

cellor ought to write the word "incentives" over all the rooms at the Treasury. If ever there was an occasion when a Budget should have been prepared upon the basis of incentives, it is at the present time, if we are to capture the North American export trade for which the Chancellor has appealed again today.
Beer: we are to have a penny off the pint. Tobacco: as far as I can understand the proposals, no change. P.A.Y.E. and some reduction or some help with regard to bonus or overtime, instead of allowing the worker when he is doing his overtime to work for the Chancellor of the Exchequer: nothing at all. Income Tax reduction as an incentive: nothing at all. And the housewife. After all we heard about appeals by the various political parties at by-elections, municipal elections, and so on, as to the vital importance of the housewife's vote. We have the Tea Duty, down 6d.; sugar down, but cheese up 4d., meat up 4d., margarine up ld., butter up 2d. Football pools are up, matches ½d. up, the telephone service increased in cost. Death Duties are increased, and a machinery allowance on the new cost increase from 20 per cent. to 40 per cent. At the tail end, the small sprat to catch a mackerel—or snock—the penny a pint off beer.
I referred to the Chancellor of the Exchequer as the "Iron Chancellor." But the worker, when he listens to these proposals on the radio tonight, and when he takes up his daily paper tomorrow and reads of these changes, will go back to his football pools and dog racing with a shrug of his shoulders and will say there is no incentive there for him to put in the extra work for which the Chancellor of the Exchequer appeals so constantly and, in this Budget, so dramatically.
As regards industry, I think that executives—I will not mention the capitalists—will be thankful for the small mercies but their reaction to this Budget will be to inquire the date of the next one. I do not say they will inquire the date of the next Chancellor, but that is all they will find in this Budget to assist them in the vital question of increased production—as the Chancellor said in his speech, increasing the volume of production in order to have a greater distribution of the goods that are consumed in


this country. As for the old people—on whom there is a growing burden in the high cost of living in this country today—there is nothing in this Budget at all to enable them to cope with the rising cost of living. I do not think that astronomical figures in a Budget interest the ordinary man in the street, but I was rather surprised that the Chancellor, in referring to long-term paper indebtedness, did not refer to the £1,675 million which is the long—term capital responsibility for the nationalised industries—civil aviation and so on—apart from the revenue cost which will fall on the Exchequer every year.
Then there are the national overheads. The Chancellor is to send a letter to the spending Departments telling them that we are spending £3,000 million odd a year now and that they must not increase their Estimates in the coming year. I have referred to the shake-up, or the climacteric of collectivism, which is the enormous national overhead on the people of this country at the present time. I had hoped that the Chancellor would come here this afternoon and make a bold revolutionary proposal and say, "I will get rid of the Ministry of Supply which is redundant and obsolete. I will get rid of the Ministry of Civil Aviation, which is solely a spending Department and does not help aviation, civil or otherwise." After last night I had hoped he would say "We will abolish the Ministry of Food"—not direct them not to spend more; not make those proposals which he did today as a result of which there will be an increase in the cost of living. I had hoped he would have said, "I will merge the Ministry of Food with the Ministry of Agriculture; in fact I will modernise the whole of Whitehall, local as well as regional public administration, in order to set an example of efficiency and get a reduction of the national overheads which every producer in this country has to carry as an overhead charge."
I called it "taxation with tears." On these Benches we welcome the reliefs and the concessions but, sooner or later, from that Despatch Box, this chancellor or another Chancellor will have to introduce a sound Liberal Budget based upon an expansionist policy—more for everybody by an increase in the volume of production—and a national wages policy with it. Otherwise, in 1952 we shall face

a financial and economic crisis in this and other countries which will make 1931 look like a Bank Holiday.

6.29 p.m.

Mr. Lipson: Various adjectives will, no doubt, be applied to this Budget. Coming from that side of the House some people will call it a courageous Budget, because the sentiments expressed and the policy pursued would perhaps be what we should expect to have heard from this side of the House. It is certainly.a cautious Budget and to that extent I think the Chancellor is right. We are not yet out of the wood, and the difficulties which face our export trade, upon which so much depends, still lie ahead. We are moving, as the right hon. and learned Gentleman reminded us, into more difficult markets and are likely to be subject to more import restrictions. I call it a consolidating Budget, one in which the Chancellor says, "The Government have made certain advances in the social services and this is a time when we must, as it were, call a halt." Perhaps in the policy pursued by the Budget we see a forecast of the policy which the Labour Party will put forward for the next General Election.
I associate myself with the remarks of the Chancellor about the efforts of the British people during 1948. I think that what they have done is remarkable. But a great deal of the credit for that must go to the Chancellor himself. He has given the right kind of lead and has shown outstanding courage. It is to him more than to any other single individual, that credit must go for the advance which we have been able to make in 1948.
Now, about the new taxation. The increased charges for telephones are a mistake. I should not be surprised if, before we have finished with the Budget and the Finance Bill, the Chancellor were to realise this and withdraw the proposed additional charges. Anything that is likely to impede the further use of the telephone is a bad thing. Today a telephone is not a luxury, neither is it only a convenience; it is a very considerable aid to efficiency. The cost of a telephone is already quite high enough, and it will he very difficult to convince the great masses of the people, at a time when the Post Office has such a big surplus of revenue, that those who use the telephone should be further taxed by an increase in charges,


for that is what it amounts to. It is a tax confined only to a certain section of the community: those who use telephones. The postal services as a whole should be taken together and on balance they show a very large surplus.
Nobody could have expected any spectacular remission of taxation in the Budget, for the times do not make that possible, but, when they read the details, people will find that they have got less then they expected. When the Chancellor has so very little money at his disposal for the making of concessions, one naturally asks whether the best use has been made of such money as he is able to hand back by way of remission of taxation. This is where I criticise the Chancellor's Budget. Of the very limited amount of money which he is prepared to concede to the taxpayer, £18 million alone goes to the reduction in the price of beer. Like everybody else, I am glad that beer can be sold a penny a pint cheaper, but I must ask whether that is the best possible use which the Chancellor could have made of that amount of remission of taxation. Every one of us can think of other directions in which it could have been applied. A concession could have been made, for instance, with post-war credits. It would have been a very reasonable thing for the Chancellor to have said that when a man dies his post-war credit automatically shall be paid to his widow. By doing so, the Treasury could alleviate a great deal of hardship; hardship, however, is something of which the Treasury apparently has no knowledge.
We all know also that there are cases of hardship where people lose their employment and have to seek, perhaps, National Assistance, but are not allowed to receive their post-war credits, the payment of which would make all the difference in the world to them. I believe also that a reduction should be made in the present age limit for their payment. In any event, I would much prefer that the reliefs which the Chancellor proposes to make in other directions should have been applied for this purpose. The reduction of a penny per pint in the price of beer is not likely to make any serious difference to the person who drinks beer or to the amount which is consumed. Such a proposal shows a lack of propor-

tion. If the Budget can be said to include anything at all which has an eye on the Election, either now or in the future, it is the penny a pint off beer; but when, throughout the rest of his Budget, the Chancellor obviously had regard to more serious and important issues, I regret that this should be so.
I am very sorry also that there is nothing in the Budget which will reduce the cost of living. The Chancellor is living in a fool's paradise if he imagines that there are not a tremendous number of people who find the cost of living an increasing burden. The biggest contribution which could be made to a reduction in the cost of living would be by a reduction in the Purchase Tax. There are a great many more things now on sale in the shops but for some months sales have declined for the simple reason that people have not the money with which to make purchases. It is a pity that the Chancellor has not been able this year to make some concession in the Purchase Tax, as, I think, he might have done and as people expected of him.
Therefore, while in the main I support the Budget, and applaud the courage which the Chancellor has shown in introducing it, I must confess that it contains disappointments. Those disappointments will be shared by a great many people outside this House. I hope that even now the Chancellor may think again about the matters to which I have drawn his attention and that in some respects he will make adjustments and produce at the end a Budget which would be more welcome to the great mass of the people.

6.38 p.m.

Sir Richard Acland: The hon. Member for Eye (Mr. Granville) said that we should have had an expansionist Budget. I should like to comment upon that. It seems to me that if a country that is up against great economic difficulties, as ours is, has got to expand in the years ahead, the only possible way of doing so, apart from increasing productivity and improving methods of co-operation—about the need for which we are all agreed, although we do not know exactly how to achieve it as rapidly as possible—the only way is by consuming as little as possible and by investing as much as possible in improving the capital equipment of the country. I do not


believe it would be a step towards true expansion to say, "We will let the people consume much more this year," for that could only be done at the expense of cutting down investments for improving the equipment of the country.
The hon. Member was a little misleading, even to himself, in imagining that great financial economies could have been made by such steps as merging the Ministry of Food with the Ministry of Agriculture. The economies which lie in such a field are only fractional in terms of millions of pounds, however ruthlessly such steps might be carried through. The only way to economise substantial sums on the expenditure of different Ministries is by telling the Ministries as a matter of policy that they should stop doing some of the jobs which they are now doing. If we tell the Ministries to do less work, they will cost less money. If the hon. Member had given a list and said, "These are the jobs which Ministries are now doing but which I think they need no longer do," he might have shown how economies could be made which might have run into tens and twenties of millions.

Mr. Granville: I was not speaking of a "Geddes Axe"—I know the fallacy of a "Geddes Axe." I was talking of efficiency in national administration which is important in relation to the technique of organisation of nationalised industries and so on. In all those things efficiency is related to economy.

Sir R. Acland: I quite agree. The hon. Member and I are in agreement and are in favour of the sort of progress that is made by the Organisation and Methods Department of the Treasury. Perhaps he feels that if he were in the place of the Chancellor of the Exchequer, this work would be going forward more rapidly and with more drive behind it; but it could not mean, by simply improving efficiency, an economy by 1950 of more than the order of £250,000 per Department and perhaps running up to £5, £10, or £15 million in all. The self-misleading of which the hon. Member and others are guilty is in thinking that this would be a way of noticeably reducing taxation and enabling all of us to consume more goods. If we try to consume more goods, either there will be inflation, or a cutting down on capital re-equipment, and to cut down on capital

re-equipment is not an expansionist policy.
The hon. Member for Cheltenham (Mr. Lipson) said that this Budget was like one which would have come from a Chancellor from the Front Opposition Bench. I do not think that can be made out, because a Chancellor from the Front Opposition Bench would long ago have gone beyond the suggestions made by the hon. Member for Eye for improving the efficiency of Departments and thereby saving a few quarter millions here and there. A Chancellor from the benches opposite would long ago have gone to where he could get great economies of expenditure, cutting down the jobs the Departments are doing and particularly the social services, some of which, of course, he would not have had to cut down for the simple reason that he would not yet have introduced them. Thank goodness, therefore, we have had a Budget from a Labour Party Chancellor and not from a Conservative Party Chancellor.
My judgment, however, is that this Budget will come as something of a shock to public opinion outside this House, and for my part I think it will come as a somewhat salutary shock. In the last few weeks I detected, if I was not mistaken, a rather dangerous trend of public opinion—an increasing belief that somehow or other for the inhabitants of this country things in general ought, under the process of some moral law, to be getting better and better, easier and easier, as successive months and successive years roll by. This mood of, "Here we go back to normal, boys" has perhaps been encouraged by the Minister of Fuel and Power putting on the lights of London again, although I see that the coal consumption involved was very small and perhaps the pleasure very great. It has also been encouraged by decontrol of various kinds, and the nation is drifting into a thoroughly unhealthy attitude of "Good old 1938. Let us get back as quickly as we can." This country is not going back—

Mr. Jennings: It has gone.

Sir R. Acland: It is certainly not going back to what hon. Members think normal. On the contrary, in a changing and ever more difficult world, the alternative for us is either to go forward and to become a very different kind of com-


munity, or at best to sink into innocuous desuetude as a community and, at worst, complete social chaos. I hope this Budget may have dispelled this attitude of "back to normal" and suggested that things do not of themselves get progressively easier, and easier for this country. We too often talk as if things ought to be getting better because we are each year one year further away from the war. We often hear speeches which begin "Four years after the war, ought it not to be better than this?" Next year, of course, it will be five years after the end of the war and people by then will think it ought to be getting better still. I would point out that as the years go by we do not get further and further away from something in the past which was causing us difficulty, but further and further into an ever-developing world trend which inevitably builds up greater and greater difficulties for this country.
I have pointed out over and over again on public platforms, and once or twice in this House that for the last 50 years there has been a trend, and continues to be a trend, by which all the things this country makes and wants to sell get commoner and relatively cheaper in the markets of the world and everything we most desperately need and want to buy gets rarer and more expensive. That has been a world-wide trend working against us for 50 years past. It may vary over a six months' period and go in our favour, but over decades this trend moves against us inexorably and, therefore, makes our problem successively harder; and anything we can do to increase productivity will only just enable us to keep pace with this developing trend.
Furthermore, in the next three years it will become harder and harder to free ourselves from the necessity of asking our generous friends in the United States for the aid which they give us. I am happy that we only ask for 900 million dollars as compared with 1,200 million dollars last year. That is a step towards economic independence which we have taken in these 12 months. It will become harder to take the next three steps of 300 million dollars less in each of the three following years. When that task has been achieved, there is another world-wide task which will be imposed upon us, if we are to stand any chance at all of sustaining our way of life and our values in this 20th

century of world-wide revolution. That task is that from the moment we have freed ourselves from extraordinary American aid, it will become incumbent upon us year by year to make ever-increasing material resources available to the many millions of inhabitants of backward countries which are associated with us. We shall have to choose either to make contributions in capital development to those territories, helping them in the building of everything they need—roads, harbours, schools, hospitals, teachers' training colleges, etc.—or see those peoples one by one break from partnership with us and pass over either into chaos or into Communism, or both.
For all these reasons, I hope that this Budget will have done something to shatter the British daydream that somehow or other there is or should be some mysterious factor in the situation which should be gently wafting us onwards and onwards to ever easier material times. It may be thought that the things I am saying might give some electoral comfort to hon. Members opposite, but on reconsideration I think that the views I am putting forward, when one comes to look at them from a political point of view, are much more favourable to the political doctrines of the party to which I belong. If there was any prospect of enormously increased material resources becoming available to this country of ours, there might be a certain measure of grim rugged expediency associated with the happy slogans "Set the people free" and "Let the best man win." In those circumstances that might be the most expedient, the easiest and simplest way to run the show. But that policy becomes psychologically and politically impossible and can only lead to complete social chaos and industrial breakdown if, as I suggest, these expectations of unlimited material well being waiting for us just round the corner are purely illusory.
If my assessments of the material long-term prospects of Britain are correct, the planning of social justice becomes not less necessary but ten times more necessary than ever we previously thought it was. I wish to support what was said by my hon. Friend the Member for Norwood (Mr. Chamberlain). After all it is, in the last resort, the man or woman who puts on overalls and goes to work with his or her hands in the factories, or puts on corduroys and goes to work with his or


her hands on the land—working with machines in their hands more and more, if possible—upon whom we depend. They, the working population of the country, will, I am sure, appreciate the situation in which our country finds itself in a changing world, and will give everything that is required; they will be moderate and abstemious in their demands on the total wealth of the nation, on the one condition that they are satisfied that they are living in a country which is becoming ever more and more fair and just to all its people.
It might be thought that I would feel a little gloomy in offering the forecast which I am offering to the Committee tonight. Not at all. I do not see any reason why the people of this country should not be very much happier than they are in spite of the fact that they are not going to be, as I think, very much richer. But we must look at some of the psychological consequences of not being richer. Some of the inequalities which are in any case economically not very important may be psychologically tolerable if we think of them as something with which we are putting up for a year or two until things get very much better all round. If the material wealth available to this country, however, is not likely to increase in a sensational and dramatic manner in the next few years, inequalities which might otherwise seem psychologically tolerable become intolerable when put against the realities of the situation confronting us.
I think that my hon. Friend the Member for Norwood touched accurately upon some of the important inequalities. It is all very well to offer to our working population as a reason for gaiety and enthusiasm the unquestionable fact that the poorest man in Britain is probably enjoying a standard of living 10 times higher than the world average. Someone may wish to say that it is five times or four times higher; the statistical data to make an exact comparison are probably not available. The exact comparison does not matter for the purposes of my argument. It is all very well to tell the man who works on the floor of the factory that he and his family are four or five or 10 times better off than the world average. That is not very comforting if he says, "Oh, yes, but there is someone else who never comes and works on the

floor of the factory, who never seems to me to be doing any socially useful work. I have just seen in the paper that he has netted so many thousands of pounds for himself by doing nothing." The workman says that that is not fair; in the old worn phrase, people will not "wear it."
I believe that there needs to be in the next few years a reduction in the top salaries that are paid on our Government Boards and in private industry. I believe it is essential to set up now a strongly supported commission or committee of inquiry of some kind. If it cannot be done officially by Members of the Government I hope that it will be done unofficially by back bench Members of the Labour Party and others outside who can be associated with them—a powerful inquiry to investigate all the means by which some citizens are enjoying a standard of living which does not correspond to any contribution which they are making to, the well being of the community. I believe it to be part and parcel of the psychological task of persuading the generality of our people to accept this Budget that they should see that such an inquiry is established and that it is getting to work and means to achieve results. I commend that proposal to the Government Front Bench and to my colleagues in the Labour Party. I believe it to be of vital importance to the wellbeing of our future that we should press ahead with it.

6.58 p.m.

Mr. Emrys Hughes: I entirely agree with the remarks which have been made by my hon. Friend the Member for Gravesend (Sir R. Acland) about the necessity to set up a commission either a Government Commission or one of back benchers with a view to equating the incomes at the top with those at the bottom. It was a great mistake for the Government to embark upon a great programme of nationalisation by giving huge salaries of £8,000 and £5,000 a year to people on the boards at the top of those industries. I believe that there is a definite demand in the country, and especially among the miners whom I represent, in favour of the constructive proposal which has just been suggested.
I wish to express some disappointment that the Chancellor of the Exchequer did not see fit, in his survey of the economic position of this country to give us some


indication of what are likely to be the economic consequences of the Atlantic Pact and the economic consequences of the Foreign Secretary's policy. I believe that there was too much of a tendency in the Chancellor's speech to skate over interesting developments that are bound to come about in the economic structure of our country as a result of what I believe to be profoundly shortsighted ideas of foreign policy.
It was rather noticeable that the Chancellor laid the stress on and emphasised the economic consequences of the social services. He talked far more about burdens of that sort and the fact that we must seek realism so far as the social services are concerned. He did mention the Defence Estimates, but he relegated them to the background. He omitted to face up to the economic implications of this huge burden of £760 million with which we shall be saddled for armaments—non-productive expenditure—for every year that goes on. He even intimated that, with the development of Western Europe, we can expect no reduction in the £760 million spent on the Army, Navy and Air Force, but rather, as a result of our Western Europe defence policy, we could look forward to a possible increase in this expenditure. Even if the Chancellor is the economic and financial wizard that Dr. Schacht was, I do not think he will be able to avoid the sort of problem which Germany had to face. There is the possibility of inflation not merely as a result of increases in the social services, but as a result of huge increases in armament expenditure to which we have been committed as a result of the Pact which the Foreign Secretary has signed in Washington this week.
I put a Question to the Economic Secretary to the Treasury asking exactly what were the financial implications and what were likely to be the financial costs of the new policy represented by the Atlantic Pact. He said that it was premature to say anything at the present time. I take the view that if it is premature to assess the economic future and the financial result of a policy, then it is premature to sign it and be committed to it. I do not believe that the Chancellor has taken into consideration the fact that this country is likely to become a huge armament factory for the

purpose of the new foreign policy outlined in the Pact.
I wish to deal with the implications of some of these Estimates. For example, we have been told that the Treasury is to circulate to the various spending Departments a stern warning that there shall be no Supplementary Estimates. Imagine the effect that will have in the various spending Ministries. I wonder what effect it will have on the Secretary of State for Scotland. On receipt of this advice from the Treasury that he not to have additional expenditure, is the Secretary of State for Scotland going to say, "We now have to cut down on housing, on health services, on education, on the social services"? This policy will result in a situation similar to that which existed in pre-war Germany. We laughed when Goering talked about guns before butter. Now, nearly five years after the war, we have a Chancellor of the Exchequer talking about guns before cheese—because that is the implication of reducing expenditure on food subsidies. I fail to see that there is the slightest justification at the present time for reducing the food subsidies. The whole argument which the Labour Party has been using in the country at by-election after by-election, and will presumably use—

The Financial Secretary to the Treasury (Mr. Glenvil Hall): May I interrupt my hon. Friend? It would be a pity if it went out from this Committee that we were reducing the food subsidies. My right hon. and learned Friend the Chancellor of the Exchequer made no such statement, and he does not propose to reduce them. What he said was that there must be a limit to their increase, which is quite a different thing.

Mr. Hughes: I accept the correction and I am glad it has been made, because I should be the last to wish to misrepresent in any way—

Mr. Scollan: May I ask the hon. Member for South Ayrshire (Mr. Emrys Hughes) whether it is not the case that the Chancellor also said that the policy in the past had been to pay the deficit on bulk buying, in other words, the subsidy on food, and in future the amount would be stabilised and no further payment would be made; which means a reduction in the food subsidy?

Mr. Hughes: I understood that that was the logic of the argument, but the Minister who will reply for the Government can correct any misapprehension that I may have created. Was not the argument of the Chancellor that the price of cheese will increase by 4d. a pound—

Mr. Willis: And butter and margarine.

Mr. Hughes: Yes, and butter and margarine. So I suggest that the effect of this financial policy will be to increase the cost of living to the lower section of the workers, the people who are doing the hard work in the country. I suggest that this policy is leading us in the wrong direction. Next year, as the cold war develops, we shall have increasing demands from the Armed Forces and we shall be told that we shall have to reduce food subsidies. That will be the inevitable logic of the arguments from the Opposition benches. I hope that when the circular comes from the Treasury to the Scottish office the Secretary of State for Scotland will say definitely, "We are not going to cut down or economise at the expense of the social services." I hope he will take a strong stand on matters of housing, education, and every kind of social service so very badly needed in Scotland and that he will say. "We shall have to oppose the Government in order to protect the standard of life of our people." I hope that the Minister of Health will do the same.
We know which are the most powerfully entrenched vested interests in the country. They are the defence Services. This year the Army is getting £304,700,000, and there has been a Supplementary Estimate. All the arguments used in the Debate on the Army were arguments brought forward by hon. and gallant Members on both sides of the Committee. They demanded changes in the structure of the Army which would inevitably result in increased expenditure on the Army next year. I can see the Treasury circular arriving at the War Office and the Secretary of State for War saying, "No." The Secretary of State for War is optimistic about the increased number of people he will get into the Army. These men will have to have arms and we know that the cost of arming a modern Army is heavy. I hope I am

wrong but I can foresee that next year there will be a Supplementary Estimate from the War Office, and additional expenditure on the Army.
Suppose Field-Marshal Montgomery says, "I want more men: I want increased expenditure." Will the Chancellor put his foot down and say, "We cannot afford that, because it will result in inflation."? This year the Navy is asking for £189,250,000. Again, all the arguments in the Debate on the Navy, which came from experts on both sides of the Committee, were to the effect that the whole of the Navy would have to be re-modelled in the light of modern armaments. There is a sum of £8 million for research. What are they to do if, when they have brought forward their proposals for remodelling the Navy. the expenditure is not sanctioned by the Chancellor?

Mr. Vane: Is not the hon. Gentleman saying, in a rather longwinded way, that he would far rather have no Army, Navy or Air Force at all?

Mr. Hughes: I have already explained my position quite clearly. I am endeavouring to point out the economic and financial implications behind the policy of those who believe that a strong Army, Navy and Air Force will result in the defence of this nation. I believe that they are going forward to an economic dilemma which cannot be faced. If their argument is right, we shall go forward to national bankruptcy.
At the Air Ministry this year they are spending £207,450,000. In the Memorandum justifying this expenditure we are told that the Estimate is £34,450,000 more than in 1948–49, excluding the Supplementary Estimate. We have had demands—we had them at Question Time today—for a stronger bombing force. Today I asked the Minister of Supply what was the estimated cost of the latest type of long-distance bomber.

The Deputy-Chairman (Mr. Bowles): The hon. Gentleman can just refer to Supply, but he cannot go into details of the Estimates or the particular needs of any of the Services. He may refer to them generally, but not in any detail.

Mr. Hughes: My argument was that I submitted a question to the Minister of Supply today about the cost of this Service.

The Deputy-Chairman: That is exactly what I have explained to the hon. Gentleman. He cannot go into any detail of any particular Service. He can speak generally about the Army, Navy and Air Force, but not in detail.

Mr. Hughes: I do not wish to pursue a detailed investigation of the expenditure on the various Services. I merely wish to say that when we had the various Estimates before us we asked questions which were never answered. I defy the Chancellor or any of the Ministers who represent the Treasury to say that they know exactly what the £760 million is for. There is an iron curtain of secrecy round it. We are asked to budget for £760 million and the Ministers do not know exactly the purpose of it. I consider that we are going if not into a war economy then into a pre-war economy. We shall have the manpower of this country diverted from productive work into munitions and into the Armed Forces. Inevitably that must lead to a reduction of the standard of life, to fewer consumer goods and to the position which faced Hitler Germany.
I do not think that the Chancellor can avoid that dilemma. Next year he will have to come to this Committee and ask for more money for armaments. Pressure will be put upon him to reduce the social services so that more money may be spent on the defence Services. I see no way out of the dilemma. That is why this is a disappointing Budget. It is laying the financial basis of a pre-war or war economy which must inevitably reduce the standard of life of the people. From that point of view, it should be closely scrutinised by the Members who sit on the Labour benches.

7.15 p.m.

Sir Henry Morris-Jones: I have never before taken part in a Debate on Budget day. Having listened to something like 25 Budget speeches, I must say that my reaction to this one is a feeling of some very slight relief. We have at last a Chancellor of the Exchequer who has, if not the keenest, then certainly one of the keenest minds in what we call the Labour movement in this country. We have a Chancellor who has realised that for the last three years we have been living in an artificial Utopia. He has realised that, even at the expense of unpopularity in his own ranks, for the sake of the country he must apply a very slight

brake—it is only a very slight brake—on the vast Socialist schemes to which we have been accustomed in this House for the four years since the termination of the war in 1945.
The hon. Member for Gravesend (Sir R. Acland) thought that the Chancellor had not gone far enough in the process of securing for us a classless society. The right hon. and learned Gentleman is going some way in that direction. There has been a steep increase in Death Duties. I am sure that that will please Members on the benches opposite. On estates of £1 million, 75 per cent. will be paid instead of 65 per cent., leaving only one quarter. Even on estates which would be regarded as reasonably moderate—those of £20,000 or £40,000—a considerable addition has been made in the process of eliminating and abolishing the middle and revenue-earning classes, apart from the working-class population. As far as I have been able to follow my history, every classless society ever invented has perished. If the hon. Baronet is expecting a very vast accretion to the incomes of the working classes by the abolition of the upper classes, he is greatly overestimating the amount they will receive. I understand that it is only likely to be something like 4s. a week all told on the wages of the wage-earning population.
I am sure that we appreciate the point of view put forward by the hon. Member for South Ayrshire (Mr. Emrys Hughes) who, I understand, is a sincere pacifist. He does not believe in armaments of any kind for the Army, Navy or the Air Force. I remember a time when the then leader of the Labour Party in this House held the same view. I refer to the late highly regarded Mr. George Lansbury. Our position during the years 1939 to 1945 would have been precarious if the views expressed by the hon. Member tonight had been the views that prevailed generally in the country.
At the risk of making the Chancellor perhaps a little more unpopular than he was hitherto in his own party, I want to congratulate him on bringing forward at last a Budget which begins to face realities for the first time since 1945. I am sure that the right hon. and learned Gentleman can stand that risk: it would be very difficult for his party to do without him. Whatever Chancellors of whatever party we may have in future, it is


now quite clear that the Budgets which we have had in the past few years, with all the idealism and enthusiasm which they had behind them, were definitely bound to come to an end. I am very glad that a Socialist Chancellor of the Exchequer has seen the red light and has taken some steps to apply a slight brake to the immense demands that are always forthcoming, on the supposedly unfathomable depths of the pockets of the people of this country.

7.21 p.m

Mr. James Hudson: I did not have the privilege of hearing the speech of my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) in which he made his protest, which I desire to support, against the Chancellor's attitude concerning the Services and the expenditure involved on armaments. I, too, want to protest particularly on that matter, because the Chancellor seems to me not only to be satisfied with the tremendous costs of the Services, for which he has to make budgetary provision, but also positively visualises increases in the enormous amounts that are now put before us. It is to me an appalling situation that the Chancellor was able to say that, in a Budget speech coming just on top of the announcement of the signing of the Atlantic Pact. That Pact which is supposed to promise peace and common action, might at least have saved some of the individual items of expenditure, either of this country or of the other countries concerned. I certainly make my protest against the attitude which is being adopted now.
I want also to say a word or two, as early as possible in the discussions on the Budget, about the attitude which the Chancellor has adopted regarding some other matters of great importance. I have always congratulated the present Chancellor on his Budget proposals, and I have heard many Budgets introduced. Of all those I have heard, this is the most appalling. The Chancellor himself has said that a great appeal must be made to the country to produce more, and that even greater enthusiasm for the production drive is now called for. People must be told why it is, after the great drive they have made in the last 12 months, enormous profits have been made that never should have been made. On top of that situation, in the Budget that has now been presented, we find

that increases in the cost of food are to be placed upon the people, which will, in my judgment, make it extremely difficult for many hon. Members to secure from the workers of the country that spirit of enthusiasm for which the Chancellor called at the conclusion of his speech.
Despite the difficulties which I know the Chancellor has to meet on this question of the food subsidies, I protest against his choice this time, if indeed any time must be chosen, to take that action. The difficulties which confront us arising out of the meat situation make it difficult to understand why now, of all times, it should be proposed to increase the price of meat, thus adding to the general disabilities of working women in the country. I make my very strong protest against the Chancellor having considered it necessary to bring in that proposal.
What am I to say to the people at this time in order to justify a proposal to put extra taxes on meat, cheese and other foods, when the Chancellor, teetotaller as he is, can find it in his heart to make it easier for beer and wine drinkers? Of all the days in the year to make such a proposal, he chooses that on which the hon. Member for Orpington (Sir W. Smithers) has a Question on the Order Paper asking that 50 barrels of Algerian wine should be auctioned, and he comes here with a proposal to make wine-drinking easier and cheaper. To what extent does he think that will win from the working population of this country the enthusiasm to greater efforts in production which he expects from them? To what extent will he be assisted by that proposal?
In the matter of the production of beer, all the materials from which beer is made are required for other purposes. We have been talking this week about the meat situation and about the necessity to obtain more coarse grains in order to develop our own cattle population. It is now suggested that there shall be an easing of the situation in regard to the production of beer, so that there may be a greater demand for barley and, to that extent, a greater demand for land and a consequent decline in the amount of land that will be used for the production of grains to help us to increase our home meat supplies.
Next, there is no easement of the Purchase Tax. The Chancellor skipped lightly over it as if it were of no great account. Many of us in our movement are bitterly disappointed that no attempt is being made to take the burden of this tax off the working-class housewife in regard to a large number of commodities which are still overburdened by the Purchase Tax. It is not only the situation of the housewife about which I complain. On the producing side, the tax is having most appalling consequences. I have in my division a company engaged in the manufacture of electric water heaters, about which I have spoken in the Debates on two or three Finance Bills in the past. Gas water heaters were allowed a special remission of tax, but those people in my division who are engaged in producing electric water heaters are handicapped by a heavy Purchase Tax placed upon those articles. They are not only suffering by the fact that, like other people, they must pay more for their electric water heaters, but they are actually being deprived of their wages.
For example, in the industry to which I refer, the wages even of the lowest paid labourers are calculated on a production basis, and, if production is low—as it is as a result of this tax—their bonus is reduced. I was assured by a deputation of workers which waited on me last week that they are losing, at the lower end of the wages scale, something like 10s. or 15s. per week. I suggest that this issue ought to be investigated by the Chancellor and that it should be dealt with in this Budget. The Chancellor has totally neglected the situation of these people and has ignored their just claims in the proposals which he has submitted in his Budget. With those few words, I wish to voice my strongest protest about this matter.
I listened with something approaching not only amazement but positive alarm and fear to my right hon. and learned Friend's suggestion that he is trying to think of a tax to impose on the Health Service, towards which we on these benches have worked so hard. I suppose he would have introduced such a tax in this Budget if he could have been surer of his ground. I hope that what we say during these Debates will make it absolutely impossible for him in any Budget to introduce this tax so as to place the

cost of this service upon the individual beneficiaries.
I look upon the free Health Service as a great victory won by this party—a victory not only over the party opposite but over the worse influences that have often prevailed among our own party. My mind goes back to the days of the great controversies between Philip Snowden and Ramsay MacDonald not only on the question of the health service but on the question of the insurance service, when Snowden was fighting for the free contributory insurance system. Indeed, the free Health Service has grown from that idea—a growth of which we are all proud and which we said we would defend to the very last ditch. Yet the Chancellor comes here and tells us that he is looking for an opportunity to place a special burden on the beneficiaries of the health Service so as to bring home to them the value of the service which they are receiving. I can assure the Chancellor that they do not need reminding of its value. The working class are aware of it. There is pride everywhere in the accomplishment of this Labour Government in that respect. When one considers the advantage that we shall lose in our propaganda as a result of the Chancellor's suggestion for a special tax upon that service, no wonder hon. Members opposite laugh. I have no doubt that Communist Members will laugh, too.
I appeal to the Chancellor from the Labour Party point of view, which I have always defended and from the point of view of the Socialist principles that we have popularised, particularly during the last 12 months while we had been discussing this Health Service. Not for a moment should he have made such a suggestion. I, for one, will use all the influence at my command when we have another Budget to make it impossible for him to proceed with such a proposal. I regret very much that I should have had to speak in this strain, but I felt that it was my duty to raise these protests.

7.33 p.m.

Mr. Scollan: I agree with my hon. Friend the Member for West Ealing (Mr. J. Hudson). I, too, was very alarmed when I heard the Chancellor make that statement about the National Health Service. After listening


carefully to his long speech I was reminded of the saying about the mountain labouring and bringing forth a mouse. There has been a tremendous amount of labour involved in the preparation of this Budget, but I challenge the Chancellor or any other hon. Member to contradict this statement: If the Chancellor, having stated the financial position of the country, had said that owing to the difficulties with regard to dollar exchange, the increased burden of armaments, and the permanent burden of the National Debt, there was no justification for any change in the rate of taxation or the method of taxation, and that therefore he proposed to allow it to continue for another year, showing another surplus exactly the same as last year and the year before, I do not think a single hon. Member would have been able to say a word against it. Such a statement would have had far better results than this Budget will yield. The previous Budget gave better results than this one.
The Chancellor has given us today a two hours' treatise; he has given us a mass of documents and papers, and as for the Blue Paper in particular, I think it was specially designed to confuse rather than to make things clearer. After that special treatise on the financial situation of the country, he told us that the burden of the social services is one for which we must be prepared to pay. I have been in the Labour Party for 40 years, and during the whole of that time I have not known anybody in that party who was not aware that there would be a tremendous burden on the whole country in order to provide the social services. Indeed, we have advocated the introduction of the social services. Consequently, to be told now that there is a burden and that it must be passed over to the recipients and the people on whose behalf we have carried on this agitation for so many years, is rather astonishing particularly when it comes from one who was regarded not so long ago as flirting with the "ultra-reds." It seems to me that he has gone so far round the circle that he is now beginning to flirt with the "ultra-blues."
This is far from being a popular Budget. I do not know how the Chancellor can justify telling the ordinary housewife, "You do not get very much butter, but there will be an increase in the price; you do not get very much

cheese, but there will be an increase in the price; you do not get much margarine, but there will be an increase in the price. Your husband, however, will have a penny taken off his beer." No sane woman would regard that as a statesmanlike action. We know that the working-class man has had to pay this tax on his beer. It is not very popular, but at least he has the wages with which to pay for it. For a long time the working class have had no wages to spend on beer. The working-class man is not immediately concerned with having a penny taken off the price of his beer. The negotiation was not with the fellow who buys the beer but with the fellow who makes the profits out of the beer. It is peculiar that the people who are making profits out of this industry should receive the first consideration from the Chancellor, rather than those other people.

Mr. Chetwynd: Is it not a fact that if the Chancellor had not reduced the price by a penny, he would not have got so much revenue from the beer tax at the old rate as he will do at the reduced rate? Is not that the reason why it was done?

Mr. Scollan: No, I do not agree. Is it not the case that the Chancellor had a surplus last year, and is there not a surplus this year? Since 1945, when this Government were elected, we have been trying to do two things. One has been to balance the Budget on our domestic economy, and the other to bridge the existing gap between the dollar exchange and sterling. All the arguments that have been put forward at that Box today and on previous occasions have been that we must work harder, produce more and sell our products on the North American continent. Have we not been told today and previously that our own domestic economy should balance the Budget? We have actually had a surplus. Why have we been increasing production?—to solve the problem that remains with us because all nations want dollars and very few want sterling. All nations want dollars with which to purchase on the American continent. To tell us that the Budget would not have been balanced if the penny had not been taken off beer is to tell us something which the Chancellor himself did not claim. It would be nonsensical for any-


one else to claim it. The Budget would have been balanced without the penny off beer. I will not go into the question of how much the Chancellor will raise by the 4d. on cheese and the increase in the price of butter, margarine and meat. I do not think there is any justification for those increases.
I wonder when we shall have a Chancellor of the Exchequer with the courage to tackle No. 1 problem which, apart from the problem of armaments—over which we seem to have no control—is that of the National Debt. This is a problem over which we have control. Every year we have to raise £500 million for interest on the National Debt. I wonder when we shall have a Chancellor with the courage to say that he will declare a moratorium on the National Debt, and that there shall be no payments of interest for the next few years until the country gets on to its feet. That would be a revolutionary proposal, but what is the Socialist movement but a revolutionary movement?
The Socialist advocates that the capitalist system is effete, useless and dangerous and ultimately will create absolute chaos. He advocates an organised plan, an organised system of society, and he approaches all these problems, therefore, with a revolutionary outlook. I cannot for the life of me see why any hon. Member should have to go to the people and say that they must vote for the Labour Party because the Labour Party is mainly concerned about the welfare of the people of the country. When people say they are patriots of Great Britain or of England—and I understand most Englishmen are very patriotic—they mean something of an abstract nature, but what Socialism means is not abstract; it means the people. It means the welfare of the people who live in the country—our own people. If one section of the community claims every year £500 million out of the national revenue—and goodness knows how long it will go on—obviously the other people who are struggling to pay that £500 million and at the same time are struggling to raise their standards of life, of education and of social services, will have a tremendous task.
I suggest that the Chancellor, if he could not bring forward a true Socialist Budget should have left things where

they were and brought forward no Budget at all, because the income from the old standards was greater than our expenditure. We were getting on to our feet. Nobody can deny that the country has done well in the last 12 months and that tremendous progress has been made, and no one can say that the new Budget will improve that. Surely that is the whole point of a Budget. If it does not improve the situation, there is no justification for it. In the new Budget the Chancellor has given to a large section of the working-class a definite sense of grievance which will be shown in the forthcoming municipal elections and that, perhaps, might awaken the Chancellor to a sense of his responsibility not only to the country, but also to the party to which he belongs.

7.45 p.m.

Mr. McGovern: I have listened to the Chancellor's statement and to the remarks which have been made on the Budget. So far as the Budget is concerned, I think the Chancellor is the one man in this country to deal with the financial position, to develop the economy of the country along intelligent lines and to keep a sense of realism in our national and political life. At the same time, I believe he has not the same sense of realism so far as the ordinary folk of this country are concerned and has not the political approach which would either endear him to the mass of the people or obtain support for a political party because of the policy pursued in his Budget.
We realise that he has a tremendously difficult problem to face. One of the main features in the present life of this country is the economic recovery of the nation, and I agree with the Chancellor—and he has propagated this for years—that only by economic recovery, by increasing the productivity of the nation, can this nation sustain the present standards and eventually provide higher standards of life for the people. On the other hand, we have to recognise the menacing world situation, which is bringing about almost bankruptcy throughout the nations, and the plans for rearmament which are forced upon this country. Re-armament is costing a large sum of money and may be increased substantially; it may be something approaching £1,000 million a year before long. That, in itself, is double the


ordinary food subsidies and takes a huge part of the nation's wealth. It prevents economic recovery and at the same time it burdens the nation with a tremendous amount of taxation. No one can blame the Chancellor for the position of the world today as a result of which we are compelled—although I know certain hon. Members do not agree with this—to arm to the teeth, in spite of the view expressed at the end of the war that we should be able to disband our Armed Forces and would need to spend very little on armaments throughout the world.
In passing, I say, after proper analysis, that part of the world plan of the Cominform is to work for the national bankruptcy of the capitalist nations. It is the policy of the Cominform, a policy which is cold-bloodedly pursued, because if Russia had agreed to co-operate with the remainder of the world, neither conscription nor a vast armaments programme would have been necessary. This rearmament policy, therefore, is part of the carefully designed policy of the Cominform to work in many and devious ways for the destruction of those nations now called the Western Powers.
In addition to the annual expenditure on armaments, we have a smaller part of the population which has to bear the ordinary taxation and contribute to economic recovery. Those who are spending the money and making the armaments do not form a productive part of our economy. The men in the Armed Forces are spending our national wealth and that is helping to undermine the existing standards of the nation. We have, there, fore, to face in a realistic way, the question which a political people will examine. They will see exactly why we are driven along this road of tremendous taxation at a period when we had expected relief.

Mr. Percy Wells: Is the hon. Member not in favour of the Government taking the precautions made necessary by the action of the Cominform?

Mr. McGovern: I think it is well known in this Committee and, indeed, outside, that I believe that this is part of the price we must pay, if we wish our national life to proceed along the ways the Labour Party wants. I am not blaming the Chancellor or the Government at all because this heavy burden

is being placed upon us. We can but hope that sanity will return to the world, that Russia will change her attitude and come into the unity of the Powers and co-operate, instead of trying to create chaos and every form of disturbance. Were she to do that, we should be well on the way to recovery in this country and in the world. However, the fact is that the whole of our economic life is disturbed by this threat. Therefore, I agree to the raising of this amount of money, because if there is one thing which will prevent war, it is that what is left of the free world refuses to be overrun as some countries in Europe have been overrun.
Now let me deal with the methods of raising the money. I think there are methods of raising additional revenue that are neglected. For example, why do we not take over the pools and run them instead of allowing millions of pounds to run into the pockets of individuals? Why not direct that wealth into the pool of national wealth? Then, too, I would "soak" the dog tracks as much as the rich men have been "soaked" in this country. I think that with the progress made in raising the standard of living, the only people we need worry about are those right down at the bottom of the social ladder. I am not worried so much about men in fairly comfortable positions. The increased cost of living bears particularly heavily on those at the bottom of the ladder. If trading in food had been left free and unrestricted, and the so-called economic price had been charged for it, £5 million or £6 million would have been distributed in profits to trading companies and individuals, and food prices would have been substantially higher than they are.
I have worked it out that the increased prices to be charged for margarine, butter and cheese will mean about three halfpence per week per person. We are not able to buy so much of those commodities that the increased cost of them will bear very heavily on most people. Twopence a pound on butter when the ration is three ounces and a penny a pound on margarine, and fourpence a pound on cheese, when the ration is only two ounces, means an extra actual cost of about three halfpence a week. That will not bear so heavily on trade unionists who can force up wages and put in for


increases of pay from time to time. However, it will bear hardly on people like the old age pensioners, who are right down at the bottom of the social ladder. They are the people with fixed incomes, a group who are not living but existing today. They are the people to whom my sympathy goes.

Mr. Scollan: If food prices had not been controlled, the trade unions would never have agreed with the Government to refrain from asking for increases as they have done.

Mr. McGovern: My answer to that is that I have not observed.that the trade unions have refrained from demanding increases.

Mr. Scollan: Yes they have.

Mr. McGovern: On the contrary, there has been a substantial number of increases of pay given over the past year in various trades. We have a standard of life at the moment which could not be borne by the national income, and which the workers would not be enjoying but for Marshall Aid. By technical developments, by managerial skill, and by the enterprise and initiative of the workers we may hope for higher standards for the people of our country and of the world. Those standards will be achieved by greater productivity and a consequent cheapening of costs and prices. That is the sane way to national and world recovery. Anybody who does not see that, is blinking at the whole economic situation, and not facing the real problem of national and world recovery.
I should have been better pleased if the Chancellor had been able to say, "We are taking over the pools. We are to obtain substantially more from the totes, and so forth, and from the tax on betting, and we are to have a national lottery." If there are all these millions of pounds being spent on gambling, the nation ought to have some of that money, and out of that we could subsidise the old age pensioners and the widows and aged spinsters. We could subsidise reforms in this country out of the money spent on gambling. We ought not to try to reform the worker by telling him he has no right to spend his money on the tote, that he has no right to spend it on horses, or on pools. The workers have the right to spend their wages in

any way they think fit, but if they spend their money on those things, then our job as legislators is to attract that money into the national pool as speedily as possible, and use it for the benefit of the community.
We have to find ways and means of getting money to raise the standards of life of those at the very bottom of the social ladder. People with higher pay can look after themselves, and they have powerful trade unions and wages boards and negotiating bodies to help them. Therefore, I find that in this Budget there is a lack of realism about the people who are really suffering in this country. They are the people with small fixed incomes who can exert no power or authority of any kind. If the old age pensioners lobbied hon. Members they would find the majority of them were in favour of raising the standards of the old age pensioners.

Mr. J. Hudson: My hon. Friend is making out a good case for the old age pensioners, but would he not include in his plea large families of poor people who eat meat, butter and cheese, who are to have filched from them a certain part of what we had guaranteed to them? Not only old age pensions but other financial provisions such as children's allowances will also be affected by the Budget.

Mr. McGovern: When the hon. Gentleman talks about filching away, I can only say that I do not put it in that way. The Chancellor thinks that money should be raised and that this is the way to raise it. I am not so worried.

Mr. Glenvil Hall: I should like to interrupt the hon. Gentleman—I did it before when the hon. Member for South Ayrshire (Mr. Emrys Hughes) was speaking—to say that the Chancellor is not filching or taking. He is suggesting to the Committee that as there has been an astonishing rise in the subsidies for various articles, including food, a limit must be put to them. He is doing no more than that. He is not reducing the present subsidies. He is saying to the Committee: "I do not think we ought to allow them to soar out of sight. They began at something under £100 million; they are now more than £400 million, and by next year they will be near to £600 million. We think that is too much."

Mr. McGovern: There will always be a dispute about these things. I heard the Chancellor say last year that there must be a figure beyond which we are not prepared to go, but the figure has gone up to an exorbitant amount. If the food subsidies had gone up to £1,000 million and if we had been asked to pay for them by taking away the children's allowances, there would have been a howl in the Committee. The hon. Member for West Ealing (Mr. J. Hudson) talks about children's allowances. I quite understand that a case can be made out for all the increases in the standard of life for the people of this country that have been given by the present Government. I admit and I admire the fact that, in spite of great difficulties, we have been able to advance the living standards of the people to the extent that we have done. It is not difficult for hon. Members to put that case on the platform.
I am putting the case that the people at the bottom of the ladder deserve our sympathy. The other people, who are drawing family allowances and their wages, are not in the same category. Their money has been raised during or since the war. The people with fixed incomes, like the old age pensioners, are not getting the increase that every hon. Member would say on the platform they are entitled to. What is the reason? If we represent the wishes of the people, why are the old age pensioners not getting an increase? It is because Members of Parliament are not prepared to press the Government strongly enough on behalf of the poor people at the bottom of the social ladder. I quite accept the Budget proposals, except that something of a substantial character should be done for old people and those at the bottom, whose burdens have been continually increased until they are almost intolerable.
The Chancellor of the Exchequer is one of the finest men this country could have. From the political point of view, he does things that one should not do and which have not been done in the past. He is prepared to see the truth and to go for it. He will develop a policy to meet an existing situation, and he is unresponsive to political pressures, or overtures. He recommends the present course to the Committee and stands by it. The Financial Secretary to the Treasury has given us the answer. It is that the Chancellor is making proposals to the Com-

mittee. Greater protection should be demanded in this Budget for the people at the bottom of the ladder. I hope that in the coming Debates there may be general acceptance of the Budget proposals and that we shall demand something for the old people, to relieve in some substantial way their miserable existence.

Mr. George Wigg: The hon. Member for Shettleston (Mr. McGovern) ended his speech by paying a tribute to the Chancellor of the Exchequer. I want to underline what he said. I am sure that no right hon. Gentleman on the opposite side of the House would have had the courage to introduce this Budget. I am not surprised about that. My view is that it is a Tory Budget; nevertheless it is a Budget which the Tories would not have had the courage to introduce. It is the Economic Survey carried to its logical conclusions. When I first read the Economic Survey I was filled with foreboding but I hoped that as the White Paper was written three or four months ago, the Chancellor might perhaps reflect and ask himself a few questions before going forward headlong with the policy which he has outlined today.
What has the Chancellor set out to do? His view is that the deflationary process has not gone far enough. He has contented himself with looking for signs, and he has found the signs he sought, such as low unemployment, and concluded there is no deflationary tendency. He has found that unemployment has not increased, and he has therefore come to the conclusion that we must have a bit more of the mixture as before. It is open to any hon. Member to look for other signs. I am going to look for a sign or two myself and to make a prophecy or two. I will not accept the unemployment figures at the moment as being a guide. I look in other directions, at the physical assets. Take a look at coal. It is clearly becoming increasingly difficult to get rid of certain kinds of coal. There will be a market for some years for particular kinds of coal, but some of the lower quality kinds cannot be disposed of even now.
Let us look at oil. In May, 1947, an event occurred which I thought at the time marked a turning point in the world economic situation. America became a


net importer of oil. Today so much oil is being produced in the sterling area that we cannot even store it. A few days ago an announcement was made by the Government that oil conversion, which has been held up for a couple of years, should now be proceeded with. That is a straw in the wind. The process of converting to oil from coal will increase the difficulty of disposing of some kinds of coal and there is a likelihood that within quite a short time we may have difficulty in disposing of this poor quality coal.
I have never believed that this country will be able to dispose of the same quantity of coal as raw fuel as we did before the war. I have always thought that this country's prosperity must be based upon the scientific use of its chief indigenous raw material. Having nationalised the fuel and power industries we should now co-ordinate those industries with the chemical industry and develop a great range of by-products based upon coal. That kind of thing has to be done, but I do not want to wander too much in that direction. If I am right and the Chancellor is wrong, then probably before this year is out, there will be unemployment in the coal mining industry because we cannot get rid of the coal we produce. I notice that already the Chancellor has lowered the ceiling of manpower to be taken into that industry. I regard that as significant. I know that at one time there was a considerable opinion in the House that more use ought to he made in the mines of foreign workers. At the present moment it is becoming impossible to place the E.V.W.'s already in this country. I say—and my words will go down in HANSARD—if I am right and the Chancellor is wrong, one thing which we are going to see is the emergence of unemployment in the coal industry.
I want to turn to another aspect of the Chancellor's policy. Here again this bears upon the policy of the Minister of Fuel and Power. I think that the proposal of the Minister of Fuel and Power to institute a price disincentive for electricity was "barmy." I think that events have proved that to be so. It never acted as a price disincentive at all. Electricity consumption went on as before. All that it did was to add a burden to the people who pay their accounts quarterly, while those people with slot machines got away with

it. Today we have the Chancellor of the Exchequer, who, I think, has been influenced by the same reasons as those which influenced the Minister of Fuel and Power, and he is adopting the same policy about telephones. Those people who pay on the dot through the slot machine, get away with it. Those people who pay quarterly are going to be hit.
What I think the Chancellor does not understand—and I remember having an argument with him, or perhaps it is presumption on my part to say that I argued with him because I said what I had to say and he listened—is that he must get away from the idea that there is a considerable section of the community of this country who walk around with suitcases stuffed with pound notes. The overwhelming majority of our people have considerable difficulty in making both ends meet; and, therefore, if in fact we add this price disincentive—this tax, because that is what it is—to the cost of the telephone, I do not think that we shall alter peoples' social habits but only make it more difficult for them to do the things which they have been accustomed to do. I want to raise my voice in protest against what I regard as a quite iniquitous burden not only upon the private person who uses the telephone to communicate with his friends, but also upon the business community. What does it matter to the big business firms with a large turnover? After all the Chancellor is paying for this, because it will come out of the money that would otherwise go in tax; but to the small business man, the garage proprietor, the shopkeeper and others this is an added cost on his business and I think that it is wholly to be deplored.
I think that the hon. Member for Shettleston was absolutely right. Of course, we cannot consume more than we produce, and if in fact the Chancellor pumps out more purchasing power than the goods to meet it, all that would happen would be that we should run away to raging inflation. Therefore, while I do not believe that the Chancellor is right in his view about the economic situation, I do not want to advocate a wholesale pumping of purchasing power into the community. I say that he ought to distribute much better what he has to distribute. I believe that by his Budget today the Chancellor throws away one of the greatest assets that this country


has had, and that is the social equilibrium which made the stabilisation of wages and prices possible. I believe that he has thrown it away—whether deliberately or not does not matter for the purpose of my argument—and I believe that the trade union leaders who have played a patriotic part in backing up the Government during the past two difficult years will have the greatest possible difficulty in holding back wage demands in the coming months. That may start off an inflationary spiral which the Chancellor of the Exchequer is trying to avoid.
If hon. Gentlemen opposite say to me, "Well, there is no other way in which he can balance his Budget," I invite their attention to the Chancellor's White Paper. Perhaps I may say in parentheses that I never noticed much enthusiasm for this White Paper before today; it received anything but a good Press. He has certainly done the Tory Party a good turn, and I think they were a little churlish to grumble at him. I want to draw attention to Table 25 in that White Paper. There is an item showing un-distributed profits. I do not complain about that because undistributed profits go back into industry and provide for the re-equipment which will lead to greater efficiency and ultimately to higher production, but let us look at the figures. Undistributed profits in 1947 were £405 million; in 1948 £540 million; and in 1949 £575 million. So that in two years we get an increase of almost 50 per cent. in undistributed profits. To what does that point? It points to the fact that profit margins are far too high. That, in its turn, points to inefficiency at a variety of levels and certainly in the distributive trades. One has striking confirmation of that if one looks at the increasing number of people who are employed in these industries.
I want to conclude on this note: I think that today the Chancellor missed a very great opportunity; not an opportunity of giving great concessions because I do not think they were within his power to give, but what he could have done was to make it clear that the policy that produced the amazing results which are shown in this White Paper—hon. Gentlemen should turn to paragraph 10 where they will see that we have an improvement of over £500 million in the course of a year—were not secured by adopting the policy which he is putting forward

today. What is that policy in a nutshell? It is to abandon control and return to the price system. My objection is not to the Chancellor's Budget, but to this policy. For 30 years I have held the view that the pricing system never worked as its admirers said that it did and if it did work at all it worked in such a way as to cause poverty, unhappiness and suffering to millions. As a Socialist, I realised that there was a job for the pricing system to do. It was part of a system of an economic organisation which did not leave us to the mercy of the so-called laws of supply and demand. The Chancellor of the Exchequer has thrown all that away. It will not be the Chancellor of the Exchequer and it will not be only the Government, but it will be the country as a whole who will reap the whirlwind of what I regard as a retrograde, reactionary and, may I say, ghastly policy.

8.20 p.m.

Mr. Blyton: Last Thursday the Opposition anticipated that the announcements in the Budget statement today would be so good that the London County Council elections tomorrow would be won on the Chancellor's speech, and the Leader of the House then told them that they were putting ideas into his head. After his speech today they certainly cannot charge the Chancellor with electioneering, which only shows that the charges the Opposition have levelled at us in the past, of making popular announcements on the eve of elections, are without foundation.
I agree with the sentiments expressed by my hon. Friend the Member for Shettleston (Mr. McGovern) about defence expenditure. It is regrettable that, four years after a war, in order to safeguard our future security we have to spend so many millions, for fear that an aggressor may once again attack us or our shores. While it is unpleasant, I agree that this expenditure is necessary in the state of world affairs today.
A problem to be faced will be the attitude of the Trades Union Congress to this Budget. Following the White Paper on Personal Incomes, Costs and Prices, the T.U.C. agreed not to put forward demands, unless applicable to men on a very low wage scale, provided that the cost of living was stabilised; and the Chancellor agreed to stabilise the cost


of living with a food subsidy around the £400 million mark. But as prices have advanced, the day has come when the Chancellor has had to say: "Up to this figure of 465 million and no further." This year the T.U.C. has been pressing on the Government a policy for the reduction of the cost of living, and on that score they have held their hand. In face of the increased food costs proposed in the Budget, meagre though they may seem in figures, the T.U.C. are bound to review their future attitude. I think it only fair that that should be pointed out to the Government Front Bench.
I listened to my hon. Friend the Member for Dudley (Mr. Wigg)—who I am sorry to see has gone—with some amazement. He said that before the end of this year there would be unemployment in the coal industry. Well, my worry about the coal industry is that before the end of this year there will be, not unemployment but a dwindling in manpower. We know that young men are not coming into the pits, and that the labour force has been maintained with Poles and displaced persons. If the wastage continues at the rate of 70,000 a year, with the lack of recruitment and with the drying up of the flow of Poles and displaced persons, there will be a very serious manpower shortage in the industry.
Where my hon. Friend gets the idea that there will be unemployment in the industry this year, I fail to see. In the pits we are trying to increase the number of face workers so as to produce the amount set as a target this year. As one who understands coalmining, I am not prepared to guarantee that the miners will get the 215 million to 220 million tons for which they have been asked this year. They will do their best, but they have been set a formidable task. Although we are increasing the output this year, if the number of men required is not obtained we shall not reach the production figure aimed at. In the industry we shall try to get as much as we can by the end of the year but I only hope that if we do not reach that production figure, the miners will not again be criticised for not pulling their weight, because the circumstances are extremely difficult.
I agree that the Chancellor ought not to contemplate tampering with the social

services, especially the free Health Service. If he does so, I believe that he will be creating difficulties for himself amongst his own supporters. If the figure of £465 million in food subsidies is to be a stable factor—and that is equivalent to 14s. a week for a man with a wife and two children—does the figure announced today, which puts 4d. a lb. on meat, mean a second cut in the meat ration?

Mr. Glenvil Hall: No.

Mr. Blyton: This wants clearing up, because many hon. Members think it does mean that. The ration as announced is 8d. worth of meat and 2d. worth of corned beef. Today the Chancellor announced that the price of meat would go up. It would be helpful if the Government could assure us that people will still get the same amount of meat although the price has gone up.

Mr. Glenvil Hall: I can assure my hon. Friend and the Committee generally that it is not the intention of either the Minister of Food or my right hon. and learned Friend to cut the meat ration.

Mr. Blyton: I thank my right hon. Friend for that assurance. That does relieve my mind and the minds of many other hon. Members.
I consider the proposed increase in telephone charges very heavy indeed. I believe that this increase will ultimately be transferred by business concerns to the price of the manufactured product. It seems ridiculous to ask manufacturers to produce goods as cheaply as possible and then to impose this extra charge which will probably be added to the cost of their product. Further it will mean that private subscribers will give up their phones. This is no way to solve the shortage of apparatus that faces the Post Office.
Next, I wish to ask the National Assistance Board to reconsider the scales of supplementary relief to old age pensioners. A shilling a week to two persons living on £2 2s. a week means a great deal. With the increased price of coal, and of other commodities not on the ration, the old age pensioner is having a very difficult time. I do ask them to reconsider the assistance scales for persons receiving supplementary relief so that the additional cost which


this Budget imposes upon them will be eased.
My final word is this. I would have preferred it, if the Chancellor had left the penny a pint on beer and redistributed an equivalent sum on the reduction of Purchase Tax. I speak not as a teetotaller but as one who likes a glass of beer. I believe that the average man would have preferred Purchase Tax relief on the essentials for his home which his wife has to buy, rather than the penny a pint off his beer. I hope that when we come to discuss the Budget further, the Chancellor of the Exchequer will look at this matter again and re-impose the penny on beer and give the money to the housewives.

Ordered: "That the Chairman do report Progress, and ask leave to sit again."—[Mr. Snow.]

Resolutions to be reported Tomorrow; Committee report Progress; to sit again Tomorrow.

ELECTRICITY SUPPLIES, RURAL AREAS

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Snow.]

8.31 p.m.

Mr. Heathcoat Amory: The subject I want to raise is quite different from the matter we have been discussing up to now. It is the question of the charges for electricity connections in rural areas. I hasten to add, after what we have heard from the Chancellor of the Exchequer, that nothing I have now to suggest will impose an additional burden on the Exchequer. All parties are committed to a substantial programme of agricultural development, and a pre-requisite to carrying out that programme is improvement in housing, water, electricity and transport. I suggest that the present rate of progress under all these four heads is too slow, if people who live in the rural areas are to believe that the Government really mean business.
What has happened is difficult to reconcile with the promises made by the Government in 1945. Nationalisation was to mean cheap and plentiful electricity, but today the terms for connections of electricity are certainly no better than under the old authorities.

Higher prices are being asked, and the delays are said to be long. I hold no brief for the achievements of the old electricity authorities so far as extensions in rural areas are concerned. Some of those authorities were enterprising, but some were not. We were told that under nationalisation things were to be different, but that does not seem to have been the case. I wish to make it clear that I am throwing no bricks at my own area board, the South-Western Board. They have a great job to do, and they are very keen to tackle it and do it well. I was particularly glad the chairman of that board said the other day that he was very keen to keep responsibility as near as possible to the consumer, which seems to be a very good thing to do.
I suggest however that at present these area boards seem to be somewhat handicapped by existing regulations. The present policy, which is being followed in general with electricity connections, I believe, is that the boards look for a gross return of about 20 per cent., which I do not think is unreasonable in the long run. The customer is generally charged a capital contribution and also asked to guarantee a minimum revenue payment for five years. To quote a hypothetical case, if an extension was to cost £1,000 the board might say, "We expect you to pay £40 per year as a minimum for the current you take, and if you do that we shall pay £200 of the capital cost, leaving you to pay the balance of £800." I am told that costs have gone up nearly 50 per cent. since 1945 and have also risen substantially in the last year, although I am not prepared to say by how much, since nationalisation was introduced. I understand also that the estimates of capital costs of extensions are now made according to a formula laid down by the boards—it may be by the individual board—and that in many cases the work can be carried out at a considerably lower price than the price quoted in the formula. I wish to ask, in the case of these estimates, whether any overheads are included, or whether the boards propose to recover their overheads out of their revenue charges.
I should like to quote an actual case that came to my notice, which makes the position fairly clear and shows the point I am trying to make. I know of three contiguous farms in one area where electricity was wanted in 1946. The farmers


approached the then authority, and they were told the price would be £324 by way of capital contribution, plus an annual payment of £25 each for five years. They decided that that was too expensive. Last year another attempt was made, but this time an additional farm was included. They were given a price of £624, with an annual payment of £25 each, or alternatively a capital payment of £724, plus a revenue payment of £20 each per year. That was the price quoted for the group, but had there been only one farm the price would have been very much higher in comparison. In addition to these charges, the farmers would have to pay the costs of wiring and provision of the electrical equipment required.
Now in my own county, Devon, 50 per cent. of our farms are 50 acres or less, and such charges as I have mentioned are absolutely out of court as far as the small owner-occupier is concerned, who is already hard put to it to find the working capital he requires for his farm. I also understand that some applications are taking two to three months to be dealt with—I do not want to link this with my own board because I have not heard this said in their case. There is, however, a widespread fear that the machinery which has been created is likely to prove too slow-moving for the job. There is also an impression that the present administrative overheads are likely to prove very high although the answer to that may be that we should wait and see what the accounts for the first year's working will show.
The National Farmers' Union have taken the initiative in this matter on several occasions. They reached an agreement with the old authorities several years ago for a programme of rural extensions. They submitted a memorandum to the Electricity Commission in 1946 and they submitted a memorandum to the British Electricity Authority in March, 1948. The 1946 memorandum showed that there were 150,000 farms without electricity connections and of course there were innumerable small houses as well in the neighbourhood of the farms. They estimated that the cost of providing electricity connections to these farms was then about £45 million. In addition to that, it was estimated that the farmers concerned or the landlords would have to incur an expenditure of about £27 million

to complete the job. They recommended that the programme should be spread over five years.
I have several suggestions to make to the Parliamentary Secretary. First, as recommended by the National Farmers' Union, will he see that the B.E.A. undertakes a national programme to complete the job of connecting up these 150,000 farms and cottages in those areas within a given time, say, 10 years? Secondly, will he encourage the B.E.A. to take a long view, a national view, about terms? After all, agriculture is one of our most important basic industries. The problem of electrical connections in rural areas varies in scale, of course, according to the area board concerned. In an area like London there is not, I imagine, much of a problem about rural connections. But when we come to areas like the South-West, North Wales, Eastern and North-Eastern areas, the expenditure required is very formidable indeed. The 1947 Act visualises that the Minister will deal with certain problems of national interest. Section 5 gives him powers of direction to area boards on such matters, and Section 1 provides that area boards are required "to plan and carry out an efficient and economical distribution to persons in their area who require electricity." Under Section 2, boards are required to "secure, so far as is practicable, the development, extension to rural areas, and cheapening of supplies of electricity." Surely, this is a problem of national interest.
I understand that the B.E.A. set up, a year ago, a sub-committee to report on what would be the best method of dealing with the extension of electricity to farms. I understand that that committee has not yet reported or, if it has, that nothing has happened to their recommendations. I should like to know when that committee is likely to produce results. Meanwhile, most of the boards seem to be proceeding on the terms of the old authorities, with one or two exceptions. The Merseyside and North Wales Area Board have worked out a standardised method of charging for connections on an acreage basis, irrespective of the distance involved. I believe the charge is £5 for a smallholding, rising to £100 or so for a 500-acre farm. The North-Western Area Board themselves pay the full cost of high pressure extensions, and demand a contribu-


tion for the low pressure connection to the actual premises. The Eastern Area Board have a scheme of reduced capital contributions spread over a period.
I would ask how these alternatives are working out? I suggest that the B.E.A. should try to find a solution of this problem which will eliminate capital contributions altogether. I believe they are unfair to the customer who first decides to go ahead and connect his premises with the electricity supply. Either the area boards or his neighbours are apt afterwards to reap the advantage of the courage he has shown. If the capital development programme is spread over some such period as I have mentioned, any deficiency in revenue that would arise as a result of the boards being responsible for all capital expenditure would be relatively small, and would soon be recovered.
I believe that tariff improvements could be designed which would give people a greater incentive to make full use of the electricity supply when they have got it. I believe that the average revenue from electricity from farms which have been connected is today twice as much as it was before the war. It may be, however, that the time is not yet ripe, that the Parliamentary Secretary may say that he does not want greater use to be made of electricity at present owing to the shortage of generating plant.
I think I know one or two of the things which the hon. Gentleman will say in reply to the Debate. He will say there is a great shortage of poles and cables. I understand that this year about 100,000 poles are available for area boards as against the 90,000 which were used before the war, so that the supply of poles would seem to be improving. The hon. Gentleman will say that generating capacity is very limited. We know that to be so, but even with all this I believe that it would mean only 1½ per cent. additional consumption if these 150,000 farms and cottages were linked up to the supply. Would it help if small self-contained generating sets were supplied as a temporary measure for remote isolated communities?
There are, however, two things which I hope the hon. Gentleman will not say: first, that the present boards are doing us well as the old authorities would

have been doing in similar circumstances. I do not consider that even that would have been good enough for what we want today in country districts; second, that the machinery is there—the area boards, consultative councils and everything else and nothing more is required.
I know the difficulties very well. We cannot expect that all this will be done in a day, but I suggest that the Minister should give a positive directive to the B.E.A. to prepare forthwith a national rural programme which will complete this job within a given time. He should instruct them to work out a scale of charges for these extensions which will be within the means of the customers who wish to take the supply. He should make it clear that when the Government said that priority would be given to electricity extensions in rural areas they meant what they said. I hope the Parliamentary Secretary will tell me that he has agreed with every word I have said tonight and that he and his right hon. Friend, when they arrive at their offices tomorrow morning, will at once set about doing everything I have suggested.

8.49 p.m.

Mr. Percy Wells: I should like to add my plea to that which has been made by the hon. Member for Tiverton (Mr. Amory), because those of us who represent rural areas consider this matter to be of great importance. I do not know whether my hon. Friend the Parliamentary Secretary will agree with every word that the hon. Gentleman said, but at any rate I find myself in the happy position of being in such agreement.
I intervene in this Debate because I have been requested by the East Kent Federation of Women's Institutes in my constituency to do so. I have here a letter from them which contains this passage:
In this area we are deprived of both gas and electricity, and we wondered if you would help us at all in our efforts to get electricity at least brought to our homes. At present the only lighting is by oil lamps, and these arc not only dirty and troublesome but very dangerous where children are about.
I could add to that by saying that I have received a letter from a constituent living in the area saying that since the Labour Government came into office, the globes which he has to use, crack without any apparent reason. I received a reply to that Women's Institute letter from the


South Eastern Electricity Board. It was a courteously worded letter and it said:
Were the Board to extend supplies to those districts"—
that is, the villages of Throwley and Badlesmere—
the Board would be embarking on a scheme calling for a disproportionate use of materials, having regard to the small number of consumers to be supplied. Although the Board agrees with your views on the importance of electricity in the rural areas, it is regretted that, as long as the present restrictions remain, much general development work must be deferred.
The position is that we are continually in that frustrated situation. We receive petitions from villages, and we are told that because of the lack of density of population the service cannot be supplied. In the old days when I was doing my best to get candidates into this House, I used to tell dwellers in the rural areas that when we nationalised the electricity industry, we would consider providing a service and not so much consider the question of making a profit. But I have also a petition from another village in my constituency, named Doddington, and the people say:
It does not seem credible in the year 1949 we are still without lighting of any description, and have to use oil lamps.
I am very pleased to say, in connection with that petition, that the South-Eastern Electricity Board have agreed to meet me to see what can be done.
I hope the Minister will be able to refute the statement made in this House last night that much of the difficulty that is being experienced is because of the fact that certain municipal electricity authorities have not been taken over. I hope he will read what has been said in this Debate and realise that this is an opportunity of demonstrating that we recognise the hardships and difficulties of the people who are in the rural areas and who are doing such an excellent job for the nation at this time.

8.54 p.m.

Mr. York: I ought to warn the hon. Gentleman the Member for Faversham (Mr. P. Wells) that he had better be careful or he will get on the black list of his party. I was glad to hear the speech of my hon. Friend the Member for Tiverton (Mr. Amory), and I rise to support him, because I have some

evidence to place before the Parliamentary Secretary to help him in his negotiations on this matter. One of the baits that was held out to the electorate in my constituency at the General Election was that nationalisation would very quickly bring electricity supplies to the villages. Unfortunately, in many cases we have been unsuccessful in our attempts to obtain the necessary supplies.
My hon. Friend the Member for Tiverton dealt with the wide subject of rural electricity. I want to direct the attention of the House to the narrower issue of the supply to farms and, in particular, isolated farms. My hon. Friend said that the terms offered by electricity boards under nationalisation were no better than those offered by companies and authorities before the war. I am sorry to have to tell him that he was inaccurate; they are very much worse than they were before the war. I will give the Parliamentary Secretary evidence of that. Before the war in the West Riding the National Farmers' Union had an arrangement with the electricity company for the area under which the company agreed to connect farms within half a mile of one of their 11,000 volt main lines without any capital charge. When nationalisation took place and the electricity boards took over, this arrangement apparently was ended. We can, at least, see that in the controversy raging over what the companies did and what the electricity boards are doing, the companies win hands down.
I have some examples. I do not wish to name boards. My area is on the boundary of two boards and I want only to give general complaints and not to specify them so that they may be personally investigated. Discussions are taking place about these cases. In one case where the farm was no more than 600 yards from the main supply line, the first figure asked of the farmer was £900 for a connection. That was impossible for the farmer. Another offer was made of £450, which was still too much. The farmer wrote to me and asked me to help, and negotiations are going on. Another example refers to a municipal authority. The owner who wished to have a connection to an isolated farm got an arrangement whereby the connection would be made for £25 capital


contribution from him. Unfortunately, owing to the conditions at the end of the war, that connection was long delayed, and when a chance of having that connection arose, the electricity authority had taken over under nationalisation and was asking £60 for the connection.
Those illustrations are sufficient to show the Parliamentary Secretary that there is cause for reflection in his Department upon what the electricity authorities are doing. I hope that as a result of the very moderate and careful case put forward by my hon. Friend, the Parliamentary Secretary will cause a thorough investigation to be made. I have two direct questions to ask him. Is his Ministry now considering the whole matter? Are negotiations at present taking place? I am particularly glad to take this opportunity of joining in this discussion because I spent about a month trying to get a Question past the Table and failed lamentably. The Table could not accept my argument that this was the responsibility of the Minister.
I believe that all area boards need guidance from the Ministry of Fuel and Power, and unless and until they get that guidance they will not be able to make the right move to do away with these capital contributions altogether and connect up these farms, if necessary with a reasonably guaranteed rental or maximum payment per year for the first five years, as was suggested by my hon. Friend. That would be reasonable. But to ask farmers on isolated farms to bear these heavy capital demands is most unreasonable. In closing, I make a plea to the Minister to consider not only the isolated farms but, where it is possible, to take these lines past small hamlets, isolated cottages and other houses, so that the rural inhabitants in general may be able to take advantage of the supply of electricity as it goes to the isolated farms.

9.1 p.m.

Mr. Palmer: I want to say a few words on this matter, not because I am a farmer or sit for a rural constituency, but because I have some professional experience of the electricity supply industry. The hon. Member for Ripon (Mr. York) was perhaps rather more fortunate in his experience with one company in the past than some of us have been. It is quite true that some

of the companies in days gone by were extraordinarily progressive in this matter and they certainly had many difficulties, but other companies were not. I remember that when I debated on the wireless with the hon. Member for Stockport (Sir A. Gridley) on the subject of the desirability or otherwise of the nationalisation of electricity, before the Electricity Bill came before this House, I had many letters from people living in rural districts supporting nationalisation because they felt they had been badly treated by companies in the past and, of course, they hoped for a greatly improved service in the future.
The House should be grateful to the hon. Member for Tiverton (Mr. Amory) for raising this subject. There has been great neglect in the past, and it is to be hoped that with the new opportunities which should now be available to the area boards, the backwardness of this country in rural electrification will be made up. This country is certainly behind in these matters. Those of us who have studied the subject abroad and have seen the tremendous progress made in countries like Sweden or Switzerland or in rural Norway realise that. The British electricity supply industry has always been somewhat handicapped in this matter because we put much greater insistence than they do abroad, and quite properly, upon engineering standards and safety. One of the most successful rural electrification schemes in this country is the Dumfries scheme. It is now under the South West Scotland Area Board but was previously carried on under the supervision of the local County Council; it was a public authority scheme, not a company scheme.
The hope of the rural electricity consumer, or of the potential consumer, now lies in nationalisation and he looks to the Government and to the area boards to make definite progress. The hon. Gentleman the Member for Tiverton talked about the British Electricity Authority, but he will agree with me that, strictly speaking, the British Electricity Authority really has no direct statutory power in this matter, which is a responsibility of the area boards.
I have always thought that there were two economic ways of making electricity available for the countryside. One is to group the urban and rural districts and, by so doing, use the urban consumer to


subsidise the rural consumer. I see no particular objection to that, but if such a method is to be carried through quickly it would mean placing a very heavy burden upon the urban consumer at a time of economic difficulty. If it is regarded in the national interest to have an efficient and up-to-date agricultural industry, the Government might consider making a direct subsidy or assisted loans for this sole purpose of rural electrification.

Mr. Amory: Would it be relatively a very heavy burden?

Mr. Palmer: If it is to be done quickly it is likely to be a fairly heavy burden on the urban consumer. It would be a normal economic way of doing it. I would not be against it in principle, but I think we should be honest about it; we should, in fact, be asking the urban consumer to pay a special charge to enable us to bring about the electrification of the countryside. If it is in the national interest—and I believe it is—that the countryside should be electrified, so that we can have an up-to-date, mechanised, electrified agricultural industry, then perhaps there is an argument for making the charge a national one rather than a tax upon the urban user of electricity.
I agree entirely with hon. Gentlemen on both sides in saying that this is a matter of great urgency. The Government cannot properly sit indifferent to it or put the responsibility solely upon the area boards; nor is it the business of the area boards to continue some of the past practices of the companies. The companies were sometimes the culprits in this matter in days now past, and it would be wrong to use their practices as a guide for a future which, we hope, will be very different.

9.8 p.m.

Lieut.-Colonel Corbett: The hon. Member for Wimbledon (Mr. Palmer) and the hon. Member for Faversham (Mr. P. Wells) have both said that they had support for nationalisation from the rural areas. That support, I think, was probably given because people were led to believe that if the industry were nationalised they would have electricity provided as a public service as of right, and that they would no longer have to pay the capital installation fees; that they would merely absorb the current and pay for the amount which they used. That

is the general impression which was given. But what we now find is that the charges for installation are on very much the same lines as those which existed with the private companies, except that they are higher, and that the whole thing is something of a swindle. Those people feel that they have been let down and that the promise of nationalisation as it was presented to them has not been fulfilled.
One point I want to make in particular is that the spread of electricity into the rural areas, which we all agree is most essential to efficient farming, is being held up for reasons already mentioned by my hon. Friends, and for another reason which they have not mentioned. That is that although the farmer sometimes will co-operate to pay the capital charges necessary for an electrification scheme, on many ocasions two or three farmers cannot persuade some of their neighbours to enter a scheme, because those mean neighbours feel that if the other farmers who are very keen to get electricity will pay the capital charge, eventually, because the end of the line has come so near to them, they will then get electricity for next to nothing. That is precisely what happened in our district and I know several cases where is has occurred. It is essential that we should make use of the one possible benefit which may be derived from nationalisation and that is that we should get some system by which everyone will know what he must pay to have electricity brought to his farm, his shop, his home or wherever it may be. I hope the Ministry will work that out.
I must also point out that, as with the telephone and many other services, it is most unfortunate that electricity costs most to those who are farthest away in the most remote areas and they are often least able to afford it. I hope the hon. Gentleman will study that point. On the borders of Wales and on the marginal lands and hills, many small farmers would greatly benefit from the installation of electricity, but the capital charges they would have to pay under the present system are absolutely prohibitive and make it impossible.
I would express a difference of opinion on one thing which my hon. Friend the Member for Tiverton (Mr. Amory) said—that the spread of electricity was going too slowly under private companies. Perhaps we were lucky in our part of the


world, but had it not been for the war, as things were going with the company which served South Shropshire and Herefordshire, very little of that district would be without electricity now. I think it only right that someone should say that in their defence. The circumstances of war alone prevented the spread of electricity at a reasonably rapid rate and I am certain that it would have spread by now but for the war.
I hope the hon. Gentleman will look on this matter as one of urgency so that there shall be no squabbling among farmers and others as to who should pay the capital cost and no opportunity for anyone, by being canny, to derive the benefit while others are paying. He might also take into consideration the case of those who are putting in electricity now, or have put it in recently, and see whether some rebate can be given in respect of their expenditure.

Colonel Ponsonby: I wish to emphasise what has been said by my hon. Friend the Member for Ripon (Mr. York) in connection with installations, so that where possible they should take in any outlying places. It so happens that today I received a petition from residents in a little hamlet called Stangate, which is rather off the beaten track. They asked if I could intervene to help them to get electricity, which actually passes within a few hundred yards of the hamlet. I hope the Minister will use his influence with the electricity authorities to pay particular attention to this matter. As all hon. Members who have spoken have pointed out, it is of great importance that rural areas should have electricity. Nothing makes for worse feeling between these small places than a situation in which one has electricity and, for some inscrutable reason, another has not.

9.14 p.m.

The Parliamentary Secretary to the Ministery of Fuel and Power (Mr. Robens): I do not think there is any difference of opinion between hon. Members with regard to the real need for development of electricity in the rural areas. It is important today, when farming is so highly mechanised, that from a production point of view electricity should be made available to the farms as speedily as possible. From the amenity point of view, in order that we may attract many more people to live on the land away

from the towns and the cities, it is important that they should be provided with electricity so that they can enjoy the amenities that so many who live in the towns already have. There is no difference between us at all on the desirability and the need to do what the hon. Member for Tiverton (Mr. Amory) asks.
I think this Debate divides itself evenly into two parts: first, the rate of progress of the development of electricity in the rural areas; and secondly, the terms and conditions of supply. If the House agrees with me that those are very largely the lines of the Debate, I will turn my attention to those two rather important points. There is one thing, however, that I ought to say first, and that is that while hon. Members opposite do not appreciate at this stage the advantages of nationalisation, nevertheless this Debate has given them an opportunity to ventilate the question of capital charges, whereas under private ownership it was a matter of contract between buyer and seller. Therefore, if all that they expected or all that we are reputed to have said they should have expected from nationalisation has not materialised, at least they have had that great advantage tonight.
I am very glad to have an opportunity to say something about this matter. It is important, in view of the rising capital costs involved in the installation of electricity and the linking up of electricity to the farms. Let us consider the rate of progress. The number of farms that were connected up on 31st March, 1948, that is by vesting day, was 81,853, and it is perfectly true that at that stage there were a number of schemes going on. Schemes for linking up did not start on vesting day. Naturally a number of schemes were taken over; development plans were taken over; and during the past 12 months new schemes have been added and greater developments have taken place. During the nine months up to 31st December, 1948, that number had increased to 88,147, so that in those nine months there was an increase in the number of farms linked up of 6,294.
I have made some inquiries about the area covered by the area board in the Division which the hon. Member for Tiverton represents; that is, the South Western Area Board. While they have had an increase of some 659 from vesting day to the end of the year, they have gone


ahead, and although the number of farms connected up in the area in which the hon. Member's constituency is situated was 7,118 at 31st December, 1948, in the last three months up to 31st March those have increased to 7,350. Therefore, the hon. Member has had a total of 891 farms connected up since vesting day for the 12 months ending on 31st March this year.
As those figures indicate, the rate of progress has been accelerated. Of course, it is perfectly true that the speed at which this job can be done must obviously be limited by the usual factors that limit all matters of production or erection. Those are, of course, the materials and the manpower available. I am not referring to generating plant at this stage because, as is well known, the generating plant position is a peak load rather than an overall consideration. My own view, for what it is worth, is that the rural load will be useful to the electricity undertakings because milking and so on is not done in peak load hours. I do not think that it represents quite the generating problem which electricity link-up elsewhere would present.
The speed with which this job is done is determined by the amount of material and labour available and, of course, by the distances of the linkage. There are always technical difficulties about that. The hon. and gallant Member for Seven-oaks (Colonel Ponsonby) referred to a petition which he had received from the little village of Stangate saying that electricity was passing within a hundred yards of the village. It may well be that some electricity is within a hundred yards of the village, but it is possible that the amount of electricity passing that village is not sufficient for the line to be tapped and the electricity used for the village through which it passes. I cannot say without some advice on the matter. The village might need much greater capacity than the present supply. Merely because a line passes near to a village does not necessarily mean that it would not require a fair capital outlay to make that line suitable to provide electricity for the adjacent village.
A good deal of the work involves, of course, the use of poles, and this has been referred to by hon. Members tonight. The hon. Member for Tiverton is right—indeed, he under-estimated the

situation. It is rather interesting to see that, in 1945, 39,500 wooden poles were used and that that number has increased consistently until in 1948, 108,750 were used. I give these figures because I want to give two other figures about poles to show that the situation is easing. It is estimated that in the first half of 1949 84,000 poles will be required and that in the second half of the year 101,000 poles will be required. This year 185,000 poles will be required, as compared with 108,750 for the whole of 1948, and that shows at least the physical work involved is getting under way.

Colonel Clarke: Would the Parliamentary Secretary say that today the supply of poles was not an inhibiting factor?

Mr. Robens: I should say that it was not the problem it was a few months ago. It is easier.

Mr. York: Are the poles available?

Mr. Robens: Yes.

Mr. York: Will the 180,000 be there?

Mr. Robens: That is why the estimate has been made—in order that the suppliers shall know exactly what is required. The budget has been carefully worked out and, assuming that things go on evenly and supplies come forward as it is anticipated they will, these poles should be available. It is not merely some figure which someone has said is desirable; it is not that someone has said this is a desirable number of poles. It is the number of poles which can be used with schemes which are to be developed and the number expected to be available during the year. It is as reasonable an estimate as one could possibly make. Of course, to the figures which I have given for 1948 as against 1945, and the increase throughout, has been added the large number of poles which were surplus from the Air Ministry and the War Office and which were used, but I will not weary the House with those numbers.
One of the important things which we have to remember is that the whole of the material and the whole of the labour available cannot be used for the extension of new supplies. Obviously we have to make up for the war years, for arrears of work and of maintenance. Conse-


quently, a proportion of the labour and material has to be used to that end. I have been asked about future schemes of development and whether the Minister is being consulted, or is giving advice, or indeed is directing the boards on this matter. In point of fact, the British Electricity Authority have advised us that the capital budgeted for the area boards for rural schemes to be initiated during the year commencing 1st April, 1949, is upwards of £5 million. Of that, £3 million is estimated to be required for extensions to the existing networks, and £2 million is for development in entirely new ground.
As to the Minister's position in this matter, hon. Members will recollect that Section 5 (2) of the Act provides that
In carrying out such measures of reorganisation or such works of development as involve substantial outlay on capital account, and in giving directions to any area board with respect to such measures or works, the Central Authority shall act in accordance with the general programme settled from time to time in consultation with the Minister.
So the area boards send up their programmes to the British Electricity Authority, and the British Electricity Authority consult with the Minister, and they settle the programme.
Let me turn now to the terms and conditions of supply. Many examples have been given of what would appear to be fairly high capital contributions that farmers were expected to make. I ought to say at the beginning that really this question of tariffs for the rural areas raises a very high policy issue. I observe from speeches of hon. Members on the other side of the House that they recognise that to be so. What is one to do? Is one to say, "Let us have electricity throughout all the rural areas. They shall pay no more than anybody else in any other part of the country, even in the urban areas." That would mean we should have to raise the general tariff so that the town dwellers would be paying more to subsidise the rural dwellers. There may be a very good argument for that.

Lieut.-Colonel Corbett: They are lucky to live in towns.

Mr. Robens: There is something in that, I suppose. Some think it is lucky to live in towns, though personally I think it is lucky to live in the country. Some may put up the argument that if elec-

tricity were laid on to a farm it would enable the farmer to produce more from his farm and so to make greater profits, and therefore he ought to pay a little of the capital cost. That may be a fair argument; I am not making it, but only stating a possibility. The farmer might be able to dispense with a certain amount of labour by reason of having electricity on his farm, and there could be an argument that there should be recognition of his saving there. These are all arguments—there are many others which will come readily to the minds of hon. Members—on this question of tariffs, which want serious consideration.
The British Electricity Authority has remitted this matter to a special committee it has set up. While it may be true that the Mersey and North-Western Board has worked out some sort of scheme on acreage, and so on, these are interim arrangements pending a final decision on broad, general policy as to what should be done in connection with this rural development. So we have to await the final decision of this committee which has been set up by the British Electricity Authority to determine what shall be the broad general policy. Then we shall have some uniform policy throughout the whole of the country. Until that time we shall have these differences. The electricity boards will continue to have to carry on the practices of the former undertakings, but that is merely until such time as this general policy can be decided by the B.E.A.
The hon. Member for Tiverton paid a compliment to the area board in his area. I am reminded by that of a speech which the chairman of the board, Mr. Stewart, made on 1st April to the National Farmers' Union on this matter, which deals with the capital issue. He said:
In this area we are at present working on the principle that development, including that in rural areas, must be economically self-supporting. However, the capital cost of giving a supply has increased considerably in recent years owing to the increase in the cost of materials and labour. For instance, you may have seen recently that a scheme for supplying Widdicombe, which before the war required a contribution of £5 per consumer now requires a contribution of £17. The revenue anticipated from rural schemes is seldom sufficient to cover the annual charge which the board has to find, such as repairs and maintenance, interest, depreciation, rents and management, as well as the actual cost of the energy.


That would seem to reply to the question raised about the administrative costs being included. So far as this board is concerned, clearly they include all their administrative costs, and at this stage are carrying on the former practice. That is the practice now being operated by the Merseyside and North Wales Board and others, and this practice is pending the report of the special committee and a proper overall policy being agreed to.

Mr. Turton: Can the hon. Gentleman say when the special committee is likely to report, and, if the arrangements being made meanwhile are to be revised when that report comes out?

Mr. Robens: I understand that in some cases arrangements have been made with farmers. Hon. Members who represent rural constituencies know that no two cases are alike, but I am given to understand that in many cases the arrangements are that there will be a revision when the new policy is announced, and, in point of fact, the practice now being operated will be looked at once again.

Mr. Amory: I understand that the offer that is being made in the South-Western area is that if a farmer or other customer has accepted the present terms and the scheme is in hand but not completed at the time that a new scheme is put into force, then he will get a repayment, but if the scheme is completed then it will not be revised.

Mr. Robens: I should think that would be about right. I think it would be difficult for area boards to go over completed schemes because then the argument would be as to the limit which should be put on the time when a scheme was completed, whether it should be ten years back, five years, one year or six months. Therefore, I have no doubt that what the hon. Gentleman says is quite correct. All that I am saying is that in certain cases there will be a revision when the new scheme is worked.

Mr. Turton: When does the hon. Gentleman expect that the special committee will report?

Mr. Robens: I am not able to say when they will work out their final policy because this is a committee of the B.E.A. itself. It is not an outside advisory body but a sort of departmental committee of their own. I am not informed

when the committee will make a final decision, but they are obviously anxious to get this rather important policy decision made, and I am certain that they do not wish there to be any great delay in coming to a decision. At the same time, it is a most important decision to make, and it is right that every aspect and argument should be adduced on the one side and the other and carefully weighed up, so that the policy decided upon is good, sound and attractive to the consumer in the town or city and to the rural dweller alike.

Mr. York: Can we see this report?

Mr. Robens: Well, I do not think we could see such a report. After all, a business organisation with which hon. Gentlemen opposite may be connected as directors may set up a special committee to investigate some aspect of the business; the report goes to the directors, who deal with it; but they do not expect the shareholders to have the report. Clearly, on a matter of this sort the report would be for the B.E.A.; it would be for them to act upon it, and I very much doubt whether it would be published in any way.

Mr. Turton: It must be published.

Mr. Robens: It must be published, of course, in the sense of being written.

Mr. Palmer: Perhaps it could be mentioned in a paragraph of the British Electricity Authority's report, which will have to come ultimately to this House.

Mr. Robens: When the policy has been decided the reasons will have to be given, and I have no doubt that it may appear as my hon. Friend suggests. As for the publication of a report by a committee set up by the British Electricity Authority in order to give advice, I doubt very much whether it would be published. Personally, if I were a member of the British Electricity Authority, I should not advocate publication of a report by an internal committee. At least, that has not been my experience in similar positions with other bodies.

Mr. York: We cannot ask Questions about this, and we are obviously interested to know the policy decided upon. Could the hon. Gentleman explain how Members of Parliament are to inform themselves, first when the policy has been decided, and secondly what the policy is?

Mr. Robens: The policy would be very apparent, because when decided it must be made known to prospective consumers. A matter of that kind could not go by without appearing in the report of the British Electricity Authority, so that it would receive the widest publicity. Indeed, the B.E.A. would want the widest publicity for their decision on electrifying rural areas because of the necessity to get as many consumers as possible to take advantage of what they offer.

Mr. Amory: I think this committee was appointed over a year ago.

Mr. Robens: It would not be quite a year ago.

Mr. Amory: I understood it was appointed just before vesting day—in March, 1948.

Mr. Robens: At all events, there it is. I do not think that there is much point in our going on about this. I have made it clear that the B.E.A. are examining this very carefully by setting up this small committee to report to them, and in due course a decision will be arrived at. I repeat that it is a very good thing that they should have plenty of time carefully to examine this question.
I apologise for making such a long speech at the end of a day such as this, but this is an important subject, and I know that hon. Members on all sides are anxious about the development of electricity in rural areas; so are the Government, and we will do all in our power, as I am sure will B.E.A. and the area boards themselves, to see that greater use is made of electricity in rural areas, not only for the benefit of the electrical industry but for the benefit of those who use electricity and of the country as a whole.

9.39 p.m.

Mr. York: On a point of Order, Mr. Speaker, may I ask for your guidance on this matter? We have just been listening to a case in which the Minister has to approve a certain policy, whereas Members of Parliament are not allowed to ask Questions in the House about that policy. Would it not be possible for a decision such as this to be ascertained by Questions to the Minister?

Mr. Speaker: This discussion shows the great advantage of Adjournment Debates. The hon. Member asks about

Questions, but I think he had better read carefully the Ruling I gave on this matter. He has said that he could not get Questions on the Order Paper, and I daresay quite rightly so, because they related to what were merely administrative matters. Where it is a question of general policy, it is a matter for my discretion, and I have given a Ruling which I recommend the hon. Member to study.

9.40 p.m.

Colonel Clarke: We have had a very pleasant and non-controversial Debate, and I do not wish to change its atmosphere. There is one thing that the Parliamentary Secretary said, however, which should be followed up. He said that as a result of nationalisation we are in a much better position to obtain co-operation with the British Electricity Authority than we were in the past with the old companies, and that we should congratulate ourselves on that. I differ from that view. I remember, during the Second Reading Debate on the nationalisation Measure, commenting on the fact that nationalisation would destroy the arrangement that had been almost reached at that time between the distributive companies and the National Farmers' Union. I ask the Minister whether he was
prepared to promise that the New British Electricity Authority will carry out the agreement made between the National Farmers' Unions of England, Wales and Scotland and the present supply authorities made in September, 1946, to provide supplies to all farm premises at present without electricity, which number some 150,000, except in the most remote and inaccessible areas, within five years."—[OFFICIAL REPORT, 3rd February, 1947; Vol. 432, c. 1483.]
As I anticipated, that all went by the board when nationalisation came, and we have heard no more about it.
The application from the N.F.U. was renewed in a different form later on, but so far as I know no agreement has been come to. The Parliamentary Secretary has quite rightly congratulated the boards on the fact that in the first nine months of their operations a further 6,294 farms have been provided with electricity. I should like to support from my experience in Sussex what my hon. and gallant Friend the Member for Ludlow (Lieut.-Colonel Corbett) said about the company in his part of the world. To be perfectly honest, I do not think there is


much difference in progress since nationalisation. I would point out, however, that the more farms that are supplied with electricity the easier it is to progress, because each time one or two more farms are brought nearer to the mains. Recently, I went through plans for one estate in the Home Counties and one in a county further off. In one case there were few places that were not within half a mile of the mains, whereas in the other case the figure was nearer three miles, which meant that the capital costs were quite impossible and the plan had to be abandoned until such time as help could be given.
I recognise that one of the limiting factors is manpower and materials. I would like to know whether all the qualified manpower is being employed? The other day I got two men, who had been discharged by an electricity company, to do some wiring for me, and they were very good workers. I wonder whether that sort of thing is happening elsewhere. I gather that the supply of poles is easier, but is any effort being made to find poles from local sources? For a number of my farms which I have had connected to the supply I have found the poles myself, but I have never been asked whether I could find poles for adjoining farms. I am not trying to sell them, of course, but I might have been able to help if I had been asked. I believe that only 12 or 15 poles would be required per farm, and that many more poles could be obtained from local sources. Even if they came up to the high standard of quality, length and diameter required by the authority it should not be difficult to find 15 to 20 trees in most country districts.
I also believe that there should be a subsidy from the Government for connecting up isolated farms where much expense would be involved. At present, 50 per cent. of the cost of laying water on to farms is met by the Government. If the same was done for electricity I do not believe it would cost more than £20 million, spread over five or 10 years. That is about one-twentieth of our food subsidies today. I believe this would increase our food supplies and lead to economy.

Electricity is nearly as important as water in the economy of our farms.

Mr. Speaker: I hope the hon. and gallant Member will not develop further the point about the £20 million as that must involve legislation, and would be out of Order.

Colonel Clarke: I am sorry, Mr. Speaker.
Lastly, I hope a sense of urgency will be brought into this matter. The statement made by the Parliamentary Secretary about the B.E.A. sub-committee does not give me the impression that there is any great activity about this matter. We have elicited that it exists, and we understand that in due course it will report to someone, but it seems unlikely that we shall ever hear about its conclusions. It seems to be a body which has been set up to meet the pressure for something to be done about the provision of rural electricity supplies. It seems to be a case of a task being set for one body which it then passes on to someone else, as so often happens in the Army.

Mr. Robens: I must protest. I understood it was common ground that a matter of high policy should be properly worked out. Surely, the correct way to arrive at such a policy is to put experts on to the job. It is not a question of "passing the buck" to a committee. An expert committee has been appointed to give its advice to the B.E.A.

Colonel Clarke: I am not making a party point but one knows from experience that highly important matters have been referred to expert committees and have never been heard of again. I hope this is not going to be a similar case. There seems to be such shyness in giving any promise when we are likely to hear of the report that it makes one a little anxious. I hope the Parliamentary Secretary, realising as I see he does, the importance of this matter will insist he gets this report and will give us it in due course.

Question put, and agreed to.

Adjourned accordingly at Nine Minutes to Ten o'Clock.